A managed PostgreSQL instance on AWS RDS costs about $350/month for a db.t3.large. The equivalent EC2 instance costs $60/month. Add storage, backups, and monitoring, and you’re still under $120/month for self-hosted. That’s a 3× price difference.
For that premium, you get automated backups, point-in-time recovery, automatic failover, patching, and monitoring. The question isn’t whether managed databases are worth it in general—it’s whether they’re worth it for your workload, team, and budget.
I’ve helped companies save $50,000/year by moving to self-hosted databases, and I’ve helped others spend an extra $30,000/year on managed databases to prevent outages. The right answer depends on factors most comparison guides ignore.
Here’s how to actually make this decision.
The Real Cost Comparison
Most cost comparisons stop at the instance price. That’s misleading.
Managed database costs (RDS PostgreSQL example):
db.t3.large instance: $350/month
Storage (500GB gp3): $115/month
Backup storage (500GB): $50/month
Multi-AZ (for HA): +100% ($515/month additional)
Total with HA: $1,030/month
Self-hosted database costs (EC2):
t3.large instance: $60/month
EBS storage (500GB gp3): $40/month
Backup snapshots (500GB): $25/month
Second instance for replica: $60/month
Monitoring/tooling: $50/month
Engineer time (4 hours/month @ $150/hr): $600/month
Total: $835/month
Wait—self-hosted is almost as expensive once you factor in engineering time. And that assumes only 4 hours per month for maintenance, patching, upgrades, and troubleshooting. In reality, it’s often more.
The break-even point isn’t about raw infrastructure costs. It’s about:
- How much operational complexity your team can handle
- Whether you need features managed databases provide
- What your downtime costs vs your database costs
- Whether you have spare engineering capacity
When Managed Databases Make Sense
You don’t have a dedicated database team. If your developers are also your DBAs, managed databases let them focus on application code instead of tuning PostgreSQL configs, setting up replication, and debugging slow queries.
One client had a team of 8 developers and no DBA. They spent 10-15 hours per month dealing with database issues—backups failing, replication lag, storage running out. At $150/hour loaded cost, that’s $1,500-2,250/month in engineering time. Moving to RDS cost $800/month more in infrastructure but saved $1,500/month in engineering time.
You need high availability without expertise. Setting up PostgreSQL replication with automatic failover is non-trivial. You need:
- Streaming replication configured correctly
- Health checks and failover scripts (or Patroni/repmgr)
- Connection pooling that redirects to new primary
- Regular failover testing to ensure it actually works
RDS Multi-AZ gives you this out of the box. Failover happens automatically in 60-120 seconds. You don’t need to test it because AWS tests it for you.
If your SLA requires <5 minutes of downtime for database failures and you don’t have experience setting up HA databases, managed is worth the premium.
Your database workload is variable. RDS supports automated scaling for storage and (with Aurora Serverless) compute. If your database needs 2GB of RAM most of the time but 16GB during month-end reporting, Aurora Serverless can scale automatically.
Self-hosted databases require manual scaling—you either overprovision (waste money) or underprovision (risk outages).
Compliance and auditing matter. RDS provides built-in audit logging, encryption at rest, encryption in transit, and automated backups with point-in-time recovery. Setting this up yourself is possible but time-consuming:
# Self-hosted compliance checklist
- [ ] Enable SSL/TLS for all connections
- [ ] Configure encryption at rest (LUKS or encrypted EBS)
- [ ] Set up audit logging (pgaudit extension)
- [ ] Automated backup testing and verification
- [ ] Access logging and monitoring
- [ ] Security patching process
- [ ] Documentation for auditors
For teams in healthcare, finance, or government, managed databases reduce compliance overhead significantly.
When Self-Hosted Makes Sense
You have database expertise in-house. If you have a DBA or platform engineer who knows PostgreSQL internals, self-hosted databases give you more control for less money.
A client with a dedicated platform team runs their own Postgres clusters on EC2 using Patroni for HA. They save $40,000/year compared to RDS and have features RDS doesn’t offer:
- Custom extensions (PostGIS, TimescaleDB, pg_partman)
- Fine-tuned performance settings
- Custom backup strategies (streaming to S3 + local snapshots)
- Ability to SSH in and debug at the OS level
The trade-off: their platform team spends ~20 hours/month on database operations. For them, that’s acceptable because database management is their core competency.
You need database features managed services don’t support. RDS has limitations:
- No direct OS access (can’t install custom packages)
- Limited extensions (no custom compiled extensions)
- Can’t use certain Postgres features (logical replication restrictions, custom background workers)
- Can’t run multiple databases with different versions on the same instance efficiently
If you need TimescaleDB for time-series data, or you want to run Postgres with custom-compiled extensions, self-hosted is your only option.
Your workload is massive and predictable. At scale, managed database pricing becomes punitive. A db.r5.24xlarge costs $11,600/month. The equivalent EC2 instance costs $4,600/month. The price delta at scale is significant:
# 5 large database instances
RDS (5× db.r5.4xlarge): $9,500/month
EC2 (5× r5.4xlarge + tooling): $4,200/month
Annual savings: $63,600/year
If you’re spending $100,000+/year on databases and your workload is stable, the ROI on building internal database management tooling becomes compelling.
You want multi-cloud or hybrid cloud. RDS locks you into AWS. If you need to run databases in multiple clouds (AWS + GCP + on-premises), you need a consistent self-hosted solution.
We’ve built Postgres clusters for clients using Patroni that run identically on AWS, GCP, and bare metal. This gives them flexibility to move workloads based on cost or compliance requirements.
The Hidden Costs of Self-Hosted
Self-hosted databases sound cheaper until you account for everything you’re taking on:
Backup and recovery testing. Managed databases give you automated backups with point-in-time recovery. You can restore to any second within the last 35 days.
Self-hosted requires you to:
- Set up backup automation (pg_dump, WAL archiving, or pgBackRest)
- Store backups somewhere durable (S3, separate region)
- Regularly test restores (many teams have backups but can’t actually restore from them)
- Monitor backup success/failure
- Handle backup retention and cleanup
One client thought they had working backups until they needed to restore—their pg_dump script had been failing silently for 6 months. Managed databases make this impossible.
Security patching. RDS applies security patches during maintenance windows automatically. You can set the window to minimize disruption.
Self-hosted means:
- Monitoring security advisories for Postgres and the OS
- Testing patches in staging
- Planning maintenance windows
- Applying patches manually
- Dealing with failures during patching
For teams without dedicated ops staff, patching becomes “something we’ll do eventually” until a security incident forces the issue.
Monitoring and alerting. RDS includes CloudWatch metrics out of the box: CPU, memory, disk I/O, connections, replication lag. You can set up alarms in minutes.
Self-hosted requires installing and configuring:
- Prometheus + postgres_exporter, or Datadog agent, or CloudWatch agent
- Dashboards (Grafana or similar)
- Alert rules for all critical metrics
- On-call integration
This is a one-time setup cost, but it’s 8-16 hours of engineering time.
Failover and high availability. RDS Multi-AZ: enable a checkbox, wait 10 minutes.
Self-hosted HA requires:
- Setting up streaming replication
- Configuring automatic failover (Patroni, repmgr, or custom scripts)
- Implementing connection pooling that handles failover (PgBouncer or similar)
- Testing failover scenarios regularly
- Updating DNS or load balancer configurations
- Handling edge cases (split-brain, cascading failures)
If you’ve never set up PostgreSQL HA before, budget 40-80 hours for initial setup plus ongoing maintenance.
Hybrid Approach: Managed for Production, Self-Hosted for Dev
Many teams use managed databases for production (where downtime is expensive) and self-hosted for development and staging (where downtime is acceptable):
Production:
- RDS Multi-AZ
- Automated backups
- 99.95% SLA
- Cost: $1,000/month
Staging:
- EC2 with single instance
- Daily snapshots
- No HA
- Cost: $100/month
Development:
- EC2 t3.small
- No backups
- Cost: $30/month
This gives you reliability where it matters without paying managed database prices for environments that don’t need it.
Aurora vs RDS vs Self-Hosted
Aurora is AWS’s proprietary database engine (MySQL and PostgreSQL compatible). It costs 20% more than RDS but offers:
- Better performance (5× MySQL, 3× PostgreSQL according to AWS)
- Storage auto-scaling (no manual resizing)
- Faster failover (30 seconds vs 60-120 for RDS)
- Read replicas with <10ms lag
- Backtrack (undo changes without restoring from backup)
When Aurora makes sense:
- Read-heavy workloads (you need 3+ read replicas)
- Rapidly growing databases (storage auto-scales to 128TB)
- Workloads sensitive to failover time
When Aurora doesn’t make sense:
- Small databases (<100GB) where RDS is cheaper
- Workloads that don’t need read replicas
- Applications that use Postgres-specific features Aurora doesn’t support
For most teams, standard RDS is the better starting point. Move to Aurora when you outgrow RDS’s limitations.
Decision Framework
Here’s how to actually decide:
Choose managed databases if:
- You have <10 engineers and no dedicated ops team
- Database expertise isn’t your competitive advantage
- Downtime costs more than the managed database premium
- You need HA but don’t have experience implementing it
- Compliance requirements favor managed services
Choose self-hosted if:
- You have database expertise in-house
- You need features managed services don’t offer
- You’re spending $50,000+/year on databases (ROI on tooling becomes positive)
- You need multi-cloud or hybrid deployments
- You have spare engineering capacity and want more control
Red flags for self-hosted:
- “We’ll save money” without factoring in engineering time
- “How hard can it be?” (famous last words)
- No one on the team has run production databases before
- Team is already underwater with operational work
Migration Patterns
If you’re moving from self-hosted to managed (or vice versa), here’s what works:
Self-hosted to RDS:
# 1. Create RDS instance matching current specs
# 2. Set up replication from self-hosted to RDS
pg_basebackup + streaming replication
# 3. Monitor replication lag until caught up
# 4. Schedule maintenance window
# 5. Stop writes to old database
# 6. Wait for replication to finish
# 7. Update application connection strings
# 8. Enable writes to new database
# 9. Monitor for 24-48 hours before decommissioning old instance
This gives you a rollback path—if something breaks, point connections back to the old database.
RDS to self-hosted:
# 1. Provision EC2 instances
# 2. Restore RDS snapshot to new instances
# 3. Set up replication from RDS to EC2
# 4. Same cutover process as above
Both directions take 4-8 hours of work plus testing time. Plan for a maintenance window even though the actual cutover can be <5 minutes of downtime.
What We Actually Recommend
For most clients, we recommend:
Startups and small teams (< 20 engineers):
- Use managed databases (RDS or Aurora)
- Don’t self-host until you have dedicated platform/ops staff
- The engineering time saved is worth more than the infrastructure cost
Mid-size teams (20-100 engineers):
- Managed for production databases
- Self-hosted for dev/staging to save costs
- Evaluate self-hosted for production if you hire a platform engineer
Large teams (100+ engineers) or high database costs ($100k+/year):
- Consider self-hosted if you have database expertise
- Use tools like Patroni, pgBackRest, and proper monitoring
- The cost savings justify the operational overhead
Everyone:
- Start with managed, move to self-hosted only when it’s clearly worth the operational complexity
- Don’t underestimate the time required to run databases well
- Factor in total cost of ownership, not just infrastructure costs
The biggest mistake teams make is choosing self-hosted to save money, then spending 2-3× the savings in engineering time, operational incidents, and opportunity cost of not building features.
Managed databases are expensive, but they’re often the right choice anyway. The premium you pay is for peace of mind, time savings, and expertise you’d otherwise have to build in-house.
Need help deciding between managed and self-hosted databases, or planning a migration? We can help.