Would $6k include hardware, or just a software license?
I'm looking at their $2000/mo plan for 100,000 minutes of video. Compare: Modern hardware does HD faster than real time, there are 43,000 minutes in a month. So for a quad core machine, you already have a comfortable margin.
No it does not.
A low priced quad core is already in excess of their highest listed service, for less money.
Put a dual hex xeon into service and you have at least 10x the capacity (remember that even HD transcodes at faster than real time), and it pays off in less than a year.
Wha? You think that Zencoder wrote their own codecs?
They're selling an API and cloud tech, and with 20 people are certainly wrapping somebody else's encoding.
(1) I recently joined Zencoder. Consume appropriate amount of salt.
Regardless, good luck with the new gig.
Hardware / software licenses is an investment, cloud is opex (operational expense): it means you don't invest much upfront (Zencode, Amazon, etc. made that investment for you), but you pay over time. If your treasury is low you may not even have a choice between investing or using the cloud to begin with.
So you are going to say: in the long run, opex is more expensive than a wise investment that pan out well.
That's called risk management, and is the main reason many companies choose cloud services over in-house. You might invest in the wrong hardware, the wrong licenses in the case of encoding audio/video, or the wrong Linux/*BSD/Windows administrators. Switching away from Zencoder is comparatively easy and cheap.
It's a trade off, you are basically paying a premium to reduce your risks.
It's an exchange of risks, not a reduction. You incur a sizable business risk by putting a nonprofitable company in your critical path.