Enterprises can opt to straddle multiple public and private IT environments to best accommodate different application and workload requirements, and buyers must determine the most strategic and economical mix for their businesses. Considerations for security, application response times, and economics based on workload stability all come into play.
At Zuora, McElhatton sees many companies creatively pricing their subscription offerings to give customers a better handle of paying for what and when they consume a service. He has seen pricing options that reward customers for using resources during off-hours, pricing based on usage, and options for “bursting” above contracted-for server usage during times of heightened activity, he said.
“Usage-based pricing assures customers are paying for the exact value they receive, while product fee-based pricing makes it easier for companies to budget, predict and reduce churn," said McElhatton.
While marketers like to compare cloud pricing to utilities like electricity and water, the landscape is often more complex than simply paying for exactly what you use.
“For example, there are options for how redundant and resilient your service is,” said Gannon.
“Is your data replicated over multiple regions? One region? You can purchase highly available storage or less expensive storage in a deep archive that’s potentially less available,” in that restoring data takes longer, he explained.
“These options change the price per gigabyte that you pay and it’s up to you to decide what you want.”
Is Complexity Driving Cloud Costs Up?
The more complicated cloud service pricing becomes, the likelier it is that cloud costs will increase, wrote Jay Chapel, CEO and founder of ParkMyCloud, in a CloudTech article. Service providers of network and IT services have long been notorious for complex pricing. The sheaves of monthly pre-Internet business telephone service invoices, for example, spawned entire career tracks devoted to negotiating, analyzing and resolving phone service plans and invoices.
The same issue is unfolding with cloud pricing.
“Complexity,” wrote Chapel, “can often drive up bills and prevent the promised cost savings” that may have provided the primary impetus to move to the cloud in the first place.
McElhatton said, for example, that while vendors have historically sold IT to CIOs, “now others within the company are experimenting with subscription services” as they test-drive a capability for a minimal outlay.