Tuesday, July 29, 2014

Back to the Future -- Cloud Infrastructure Pricing

A growing trend in cloud computing is to set prices based on actual utilization of resources such as memory, storage, processing, and bandwidth.  This is a rational way to price cloud infrastructure, because these are the items that contribute to the cost of cloud hosting, especially as the scale of a solution increases. 

One of the benefits of moving to the cloud is to not have to worry whether you have enough computing resources, because it is so easy to add more resources in a cloud environment.

In some ways, this is a throwback to timesharing, the venerable practice of buying time on an expensive mainframe when it was inconceivable that everyone would own their own computer.

The downside of usage-based pricing is that the actual bill is hard to predict.  Without knowing the cost in advance, budgeting is challenging.  How can a customer plan for this expense?

Another risk is that utilization of resources may be beyond your control.  You could have a surge of real or fake users hitting your site or apps and then get a high monthly bill.  No doubt companies will step in with approaches to reduce the risk of pricing uncertainty, as has happened in other industries.  Buyers of cloud computing can also take comfort knowing that pricing is on a steady decline -- at least for now. 

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