Cloudware Operations and Management - Guide to Cloud Computing for Business and Technology Managers - page 388

The first dimension describes which unit is used for billing. Typical units
are as follows:
1. Time of usage : Examples are Amazon's EC2 and RDS instances or
Rackspace instances that are billed in $ per hour for specific hard-
ware configurations. Further parameters such as system load, com-
pute cycles, bandwidth usage, or number or requests are not taken
into account. However, this means that it is up to the customer to
choose an appropriate configuration needed to handle the envisaged
load.
2. Volume-based units : Examples are GB per month for storage services
or the number of requests per time unit. Volume-based pricing
models simplify resource provisioning and SLAs for the service pro-
vider: based on the requested volume, the provider can estimate the
required resources (disk space, computing resources to handle the
requests).
The second dimension characterizes the flexibility of service usage:
• On demand or pay per use : This is the most flexible approach—a cus-
tomer can use the service at any time as well as when he really wants
to use it. Apart from the consumed units (time, volume), no addi-
tional costs are billed.
• Auction based : In this model, which is, for instance, offered by
Amazon with their so-called spot instances in EC2, customers can
bid for unused capacities. The prices for such machine instances
vary over time depending on supply and demand. As long as the
price for these instances is below the customer's bid (e.g., a maxi-
mum price), the customer can use such instances. Of course, this
makes sense only for applications that are very flexible in their
usage times. Furthermore, such applications have to deal with
possible interruptions that occur when prices of instances exceed
the bid.
• Reservation based : This means that capacity is reserved at the provid-
er's side for which the customer has to pay a one-time or regular fee.
In return, the customer receives a discount for the regular charges
(time or volume).
Currently, cloud service providers use different combinations of these sub-
scription and cost types. This allows a flexible choice for customers but makes
it sometimes difficult to select the most appropriate offer. Some providers
offer basic online pricing calculators for determining the price of given con-
figurations, for example, Amazon3 and Microsoft.