Continuing the Cloud Pricing Discussion

By Scott Andersen

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In the end cloud pricing will drive you batty. No matter what you consider and how you evaluate the reality of cloud pricing is sometimes as much a learning and knowing experience as anything.

Subscription pricing is good for an organization that knows they will always use X% of compute capacity every month. The value proposition of tying yourself to a subscription is that you will if you do a good job negotiating get a discount on utility use as well.

Utility pricing is good on two levels (depending of course upon the level of the vendor).

1. True utility you pay for what you actually use is good if your usage can fluctuate by more than 50% in a month. True utility pricing is paying for exactly what is used (CPU, storage etc.) and in this case is best for a company with a small storage footprint month to month and a large potential usage footprint. A March Madness bracket application is a good example in this category. In this if no one hits the site you don’t pay anything – as there is no processing required other than the instantiation of the web site. No one fills out March Madness brackets in April – Feb. They only occur in March and the major traffic is until the third week of March (then most people stop as they realize they have already lost the bracket pool). This application has to be well written in that the compute and storage may end up being spot market and not guaranteed.
2. Measured Utility pricing is good for companies that will grab and use processing and storage on a consistent basis but the total number of machines they will consume is variable. They need the flexibility of utility rather than subscription. Overtime most buyers in this bucket will I believe move to either true utility pricing or to subscription. The value of this model is that the company will have guaranteed compute assets. It is a little more expensive than the pure or true Utility pricing.

The reality of pricing is you can come up with a million what-if scenarios. You have to evaluate the solution you have and the reality of that solution will cost you as you move to the cloud. A consideration in the pricing concept is the rise of Cloud Service Brokers (CSB’s) and the ability of a CSB to provide you with organizational pricing that may in the end be a better pricing model. They (a CSB) can broker clouds across many Cloud Service Providers (CSP’s). This would allow your organization to utilize the mix-and-match concept of pricing. Where depending upon what you were doing, you could in the end leverage the three pricing models above.

Of course there are 100 more pricing models but for now – let’s go with the three above. When you start diving into the other models its time to start talking to your provider about insurance.

Scott
IASA Fellow