Where do VDI costs hide? - A detailed TCO breakdown
Total Cost of Ownership for VDIs
Utility Insights

Where do VDI costs hide? - A detailed TCO breakdown

Struthi Giridhar

Table of Contents

What is TCO? 

Total Cost of Ownership (TCO) is a critical metric used to evaluate the overall cost efficiency of software purchases. For IT teams, managing hardware tools for a distributed workforce can be costly. Virtual desktop infrastructure (VDI) offers a solution by providing remote-friendly, secure, and flexible work environments. This guide breaks down the components of TCO and provides actionable insights for optimising VDI deployments.

TCO is used argumentatively in several business decisions to get a single-number view of how profitable or advantageous a certain software purchase can be for the problem they are trying to solve. 

The intricacies of TCO are often vague and vary on several external and internal factors which need to be accounted for, to give a realistic and definitive view on the matter. 

In this blog, we provide a comprehensive guide to understanding and defining your TCO for your most convenient alternatives while deciding your next VDI and where differentiated engineering can help with your cost efficiencies. 

Phases of TCO 

To arrive at a more factual narrative of your total cost of ownership with respect to virtual desktops, it helps to see the cost split across phases of deployment, owing to their uneven distribution. 

The three phases of your average VDI deployment include Upfront CapEx, Deployment OpEx, and Ongoing OpEx. 

CapEx (capital expenditure) represents a significant initial investment in assets that will provide benefits over multiple years. CapEx is capitalised on the balance sheet and expensed through depreciation over the asset's useful life.
OpEx (operating expenditure) refers to the ongoing costs incurred by a company for running its day-to-day operations. Unlike capital expenditures (CapEx), operating expenses are fully tax-deductible for the year in which they are incurred. OpEx is recorded on the income statement as an expense for the accounting period.

Introducing Neverinstall as an alternative to Citrix and VMWare offers a 60% higher cost-efficiency that enhances performance without sacrificing quality. Its modern architecture eliminates unnecessary components, improves latency, and ensures stable connections even at very low internet speeds, as we shall discover with a thorough analysis of the expenses through the first three years of use. By delivering substantial cost savings across setup, operational, and maintenance expenses, Neverinstall emerges as the most economical choice with its own performance edges. 

Upfront CapEx

To establish a functional VDI environment and deliver virtual desktops, organisations must invest in the following critical components if they choose a traditional solution like Citrix or VMWare, 

  • Load balancer and VPN gateway for secure and efficient traffic management.
  • Broker software for managing and provisioning virtual desktops.
  • Microsoft Windows Server operating systems and SQL databases for backend infrastructure.
  • Portal/enterprise storefront software for providing a user-friendly interface to access virtual desktops.
  • Specialised IT Labour involved in configuration and monitoring software for managing and monitoring the VDI environment.
  • Image management software for creating, updating, and deploying virtual desktop images. (Usually defers to applications like FSLogix) 
  • VDI licences for the virtual desktop software.
  • Hypervisor host licences for the virtualization platform.
  • Server and storage hardware for hosting the virtual desktops and storing data.
  • Storage management software for efficient storage utilisation and management.

The most consequential decision here relies on the hardware choice you intend to make for your organisational goals. 

Based on the assumed usage and setup for a 100-user environment requiring an on-premises deployment, the following numbers have been calculated for the most popular options: Citrix, VMware, and Neverinstall. Other alternatives in 2024 include Parallels, Nutanix, Proxmox, and Workspot, among a few others.

Total Cost of Ownership (TCO)

Your TCO calculation should account for all these factors over a typical lifecycle of the hardware (often considered to be 3 years for such calculations):

  • Initial purchase costs (hardware + auxiliary)
  • Annual operating costs (maintenance + energy)
  • Replacement costs at the end of the life cycle.

Choice of Hardware

Thin Clients vs. Full Desktops

Thin clients are generally favored for VDI/DaaS deployments due to their lower cost and minimal local processing requirements. Here’s a rough breakdown of the initial hardware costs:

  • Thin Clients: ranges from $170 to $316 per device 
  • Full Desktops: Up to $500 per device

Auxiliary Hardware Costs

Initial expenses on auxiliary hardware (antivirus software, mice, speakers, etc.) totals approximately $4,200 in the first year for setting up 100 workspaces at $42/user.

Operating Costs

  • Maintenance Costs: This includes the IT labour and the hardware replacements that go into setting up, deploying, configuring and maintenance through the year. 
  • Energy Consumption: There's a significant difference in power consumption costs between your hardware options. Assume cost per KWHr to be around $0.17, taken as a global average. 
    • Desktops: Approximately $2,543.20 per year for 149.6 KWHr
    • Thin Clients: Approximately $329.12 per year for 19.36 KWHr
  • This stark contrast highlights the efficiency of thin clients in long-term energy expenditure.

Replacement Costs

Desktop replacement costs are 876% higher than those for thin clients. This substantial difference should be factored into the long-term financial planning and TCO as well.

Cost of a Citrix VDI deployment over first 3 years

Consider Citrix’s cost-incurring stages through the first three years of VDI usage. The primary expenses include IT labour costs, VDA licence, and energy consumption. These areas represent significant expenditure, but with the Neverinstall architecture, we have demonstrated substantial improvements and optimizations, resulting in considerable cost reductions, even with your ongoing operational expenditures. 

Deployment & Ongoing OpEx

Licensing Options

When setting up a virtual desktop infrastructure (VDI), one of the significant upfront costs is software and hardware licences. However, careful planning can help streamline these expenses. The choice between Windows or Linux operating systems depends on your use case. Linux, being open-source, is a cost-effective option for scenarios like supermarkets or retail environments. However, Windows licenses may be preferred if your applications or users require Microsoft-specific technologies or familiarity.

VMWare and Citrix solutions require you to purchase the VDA license, which can be optimised by going for the 3-year subscriptions. Neverinstall allows you to opt for the Windows E3 or E5 option without the RDS Cal license.

VDI License

Citrix license stands comparatively higher at $25/user/month while VMWare and Neverinstall have a comparable rate at $5-$20 with different tiers. It's a monthly cost and can be altered according to your compute needs.

Understand more about Neverinstall's modernised VDI architecture here, to thoroughly explore the specifics.

Storage Costs 

To calculate the annual storage costs for 100 users with 128GB/user, we need to find the total storage requirement and then estimate the costs based on typical storage pricing.


  • Number of users: 100, 150 and 225 assuming a 50% growth in headcount every year. 
  • Storage per user: 128GB (0.128TB)

The annual storage costs will depend on the type of storage solution you choose (e.g.,  SDD, HDD, etc.) and the associated pricing model.

For example, if you opt for cloud storage at a rate of $0.02 per GB per month, the annual costs would be:

100 users × 0.128TB/users × 1024GB/TB × $0.02/GB × 12 months = $3,146

and so on for 150 and 225 users in the next few years. 

Energy Costs 

The energy consumption for average usage of 22 days a month, 8 hours a day, at $0.17/KWHr, not considering perpetually running machines, results in a cost of $50,261 in the first year. 

In contrast, for Neverinstall, the cost runs up to $25,295 due to the optimised logic associated with their servers and backend.

Labour Costs 

On average between highly and moderately skilled IT technicians required to run your IT set up, the cost per hour is considered to be $40. 

TCO Calculations for Citrix, VMWare, and Neverinstall

Neverinstall’s intuitive dashboard and user interface which enables setting up, modifying controls and setting granular restrictions across your diverse workforce is made so simple and effective within a few clicks that it helps bring down your annual spend on a specialised IT team from $50k to $25k per year. 

Calculating TCO for Citrix, VMWare & Neverinstall

Total Cost of Ownership for VDI - Citrix, VMWare, and Neverinstall

Initial Setup Costs:

  • Neverinstall offers up to 72% savings on desktop provisioning hardware and setup costs compared to Citrix and up to 66% savings compared to VMWare.
  • Neverinstall provides up to 40% savings on hypervisor setup and hardware costs compared to Citrix and VMWare.
  • Neverinstall eliminates the need for a delivery controller due to its browser-based access, resulting in cost savings.

Operational Costs:

  • Windows OS/VDA Costs: Neverinstall saves approximately 85% compared to Citrix and VMWare due to its non-necessity for the VDA licence.
  • IT Labor: Neverinstall reduces labour costs by up to 50% compared to Citrix and VMWare highlighting less labour-intensive management.
  • Energy Costs: Neverinstall reduces energy costs by up to 50% over three years.

Cost Efficiency:

  • Over three years, Neverinstall results in total cost savings of 45.6% compared to Citrix ($550,938 for Neverinstall vs. $1,012,687 for Citrix) and 38.5% compared to VMWare ($550,938 for Neverinstall vs. $896,099 for VMWare).

Adopting Neverinstall for thin client devices offers significant cost savings in setup, operational, and maintenance expenses, making it the most economical choice over a three-year period. 

This cost-effective solution does not compromise on performance to deliver these efficiency gains for your bottom line. The modernised architecture eliminates unnecessary components, improves latency, ensures stable connections even at very low internet speeds, and achieves more with significantly less.

Neverinstall enables efficiency through different components of your VDI set up, effectively presenting the following breakdown over the years. 

Strategic Recommendations

Hardware Selection:

  1. Adopt Thin Clients Over Full Desktops
    Opting for thin clients instead of full desktops can substantially reduce initial hardware expenses, minimise energy consumption, and lower future replacement costs.
  2. Choose Energy-Efficient Models
    Invest in energy-efficient hardware to further cut down operational costs associated with power consumption, promoting sustainability and cost savings.

Licensing Optimization:

  1. Thoroughly Evaluate Licensing Options
    Given their significant contribution to overall costs, carefully analyse licensing choices. For VMware and Citrix solutions, explore 3-year subscription options for VDA licences to potentially secure better pricing.
  2. Leverage Neverinstall with Windows E3 or E5 Licences
    For Windows environments, consider using Neverinstall with Windows E3 or E5 licences, which eliminates the need for RDS CAL licence, leading to substantial cost savings.
  3. Consider Open-Source Alternatives
    For specific use cases, such as certain retail environments, open-source solutions like Linux can eliminate licensing costs entirely.

Storage Strategy:

  1. Implement Storage Optimization Techniques
    Utilise data deduplication and compression to reduce the overall storage footprint, thus lowering associated storage costs.
  2. Adopt Tiered Storage Solutions
    Implement a tiered storage approach where frequently accessed data is stored on faster, more expensive storage, while less frequently accessed data is stored on slower, cheaper storage options.
  3. Evaluate Cloud Storage Options
    Take advantage of cloud storage solutions and leverage provider discounts for large volumes or long-term commitments to achieve cost efficiency.

Energy Efficiency:

  1. Enforce Power Management Policies
    Implement robust power management policies and virtualization technologies to optimise energy consumption across your infrastructure.
  2. Migrate to Energy-Efficient Facilities or Cloud Solutions
    Where feasible, consider moving to more energy-efficient data centre facilities or cloud solutions to further enhance energy efficiency and reduce costs.

Overall Financial Impact

By strategically selecting thin clients, optimising licensing, and implementing advanced storage and energy management practices, organisations can realise substantial cost savings. Over a typical three-year period, adopting these recommendations can lead to a total cost reduction of approximately 58% compared to traditional solutions like Citrix and VMware. This holistic approach not only minimises expenses but also enhances operational efficiency and sustainability.

By integrating these strategic recommendations, your organisation can achieve a more cost-effective, energy-efficient, and high-performing virtual desktop infrastructure, ensuring long-term financial and operational benefits.

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