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Cloud computing pricing: Beware the bill shock | ZDNet

One of the benefits of cloud computing that’s often touted by providers is cutting costs: rather than having the hassle and expense of buying servers and equipping data centers, and paying for staff to maintain them, companies can offload their workloads to the cloud, where economies of scale around the infrastructure mean that costs are much lower.

In theory, cloud users simply pay for the resources they use, as and when they need them, without the burden of paying for hardware, or data center space. That means pricing should be straightforward, right?

Not quite: there isn’t just a single model of cloud pricing.

Cloud pricing models

On-demand allows you to purchase services as and when you need them, while reserved instances work like many other types of bill, where the user forecasts what they’re probably going to need over a particular period — usually in quarterly or annual instances. The user then pays upfront, although their cloud provider may give discounts for buying services in bulk. Spot pricing is where cloud companies sell off unused processing power at a discount: companies can then bid for a certain amount of computing power at a certain price.

Google represents the closest option to pure cloud, says Dave Bartoletti, principal analyst at Forrester. “With Google, you really just pay for what you use, and you get more discounts the more you use,” he says, adding that Amazon and Microsoft have a “slightly different approach” that veers more towards reserved instances.

But while their pricing methods may vary, one thing Google, Amazon, and Microsoft do have in common is a desire to drive down the cost of services, which has led to a price war between these major cloud companies.

But while the three firms are still competing on cost, the race to the bottom has somewhat slowed.

“What’s not happening so much any more is the constant battle for discounting on list prices that we saw over the last five or six years. That’s because these platforms are maturing — those prices have come down significantly over the past couple of years,” says Bartoletti.

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Cloud computing pricing: Beware the bill shock | ZDNet.

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