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Economics of Cloud Computing

  • Last Updated : 12 Dec, 2019

Economics of Cloud Computing is based on the PAY AS YOU GO method. Users/Customers must have to pay only for their way of usage of the cloud services. It definitely beneficial for the users. So that Cloud is economically very convenient for all. Another side is to eliminate some indirect cost which is generated by assets such as license of software and their support. In cloud, users can use software application on subscription basis without any cost because the property of the software providing service remains to the cloud provider.

Economical background of cloud is more useful for developers in the following ways:

  • Pay as you go model offered by cloud providers.
  • Scalable and Simple.

Cloud Computing Allows:

  • Reduces the capital costs of infrastructure.
  • Removes the maintenance cost.
  • Removes the administrative cost.

What is Capital Cost ?
It is cost occurred in the purchasing infrastructure or the assets that is important in the production of goods. It takes long time to generate profit.

In the case of start-ups, there is no extra budget for the infrastructure and its maintenance. So cloud can minimizes expenses of any small organization in terms of economy. It leads to the developers can only focus on the development logic and not on the maintenance of the infrastructure.

There are three different Pricing Strategies which are introduced by the Cloud Computing: Tiered Pricing, Per-unit Pricing, and Subscription based Pricing. These are explained as following below.

  1. Tired Pricing:
    Cloud Services are offered in the various tiers. Each tier offers fix service agreements at specific cost. Amazon EC2 uses this kind of pricing.
  2. Per-unit Pricing:
    The model is based upon the unit specific service concept. Data transfer and memory allocation includes in this model for specific units. GoGrid uses this kind of pricing in terms of RAM/hour.
  3. Subscription based Pricing:
    In this model users are paying periodic subscription fee for the usage of software.

So these models gives more flexible solutions about cloud economy.

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