OpenTelemetry vs Proprietary APMs: Cost Comparison

When evaluating observability solutions, cost is often the primary concern for enterprise teams. This comprehensive analysis compares OpenTelemetry with proprietary APM solutions like New Relic, Datadog, and Dynatrace to help you make an informed decision.

The True Cost of Proprietary APMs

Proprietary APM solutions typically charge based on data volume, hosts, or users, leading to unpredictable costs that scale with your business. Here's what we found in our analysis:

Proprietary APM Cost Breakdown (Annual)

New Relic (Enterprise) $180,000 - $300,000

Datadog (Enterprise) $150,000 - $250,000

Dynatrace (Enterprise) $200,000 - $400,000

*Based on 500+ hosts, high data volume, and enterprise features

OpenTelemetry Cost Structure

OpenTelemetry offers a fundamentally different cost model. Instead of paying for the platform, you pay for infrastructure and optional services:

OpenTelemetry Cost Breakdown (Annual)

Infrastructure (Storage, Compute) $30,000 - $60,000

Optional Backend Services $20,000 - $50,000

Implementation & Support $40,000 - $80,000

Total Annual Cost $90,000 - $190,000

Real-World Case Study

A Fortune 500 client we worked with was spending $280,000 annually on Datadog. After implementing OpenTelemetry with a cost-effective backend, they reduced their annual observability costs to $120,000—a 57% reduction.

Client Results

Before (Datadog)

• $280,000 annual cost
• Vendor lock-in concerns
• Limited customization
• Data retention limitations

After (OpenTelemetry)

• $120,000 annual cost
• Complete vendor neutrality
• Full customization control
• Flexible data retention

Hidden Costs to Consider

While OpenTelemetry offers significant cost savings, there are additional considerations:

Implementation Complexity: Requires more initial setup and expertise
Ongoing Maintenance: Need internal expertise or managed services
Integration Time: Longer initial implementation compared to SaaS solutions
Training Requirements: Team needs to learn new tools and practices

ROI Calculation

For most enterprises, OpenTelemetry provides a positive ROI within 12-18 months, even accounting for implementation costs:

ROI Analysis (3-Year Projection)

Annual Savings $160,000

3-Year Total Savings $480,000

Implementation Cost -$80,000

Net 3-Year ROI $400,000

When to Choose Each Option

Choose Proprietary APMs When:

• Budget allows for premium pricing
• Need immediate implementation
• Limited internal expertise
• Want managed service model

Choose OpenTelemetry When:

• Cost optimization is priority
• Need vendor neutrality
• Want full control and customization
• Have technical expertise available

Conclusion

OpenTelemetry offers significant cost advantages for organizations willing to invest in implementation and maintenance. With potential savings of 40-60% compared to proprietary APMs, the ROI is compelling for most enterprise use cases.

The key is having the right expertise and support to implement OpenTelemetry successfully. Our team has helped dozens of organizations make this transition, achieving average cost reductions of 50% while improving observability coverage and flexibility.