As Cloud Computing has evolved, payment and usage models have had to evolve too. With two of the greatest benefits of Cloud being flexibility and affordability, it would be counterproductive for businesses migrating to the Cloud to be locked into restrictive, and costly, contracts.
For businesses to successfully balance the agility benefits of migrating with their budgetary constraints, they need to select a Cloud computing payment model with the full lifecycle of their chosen Cloud solution in mind. They also need to choose a pricing model that balances value and cost, while not hindering business growth efforts.
As a start, list of the different pricing models and some of the benefits/downsides of each:
1.) Flat rate pricing (A single product and a single set of features at a single price): Generally undertaken on a month-to-month basis, this approach is easier for vendors to sell and market because they have one, clearly-defined offering. But given the fact that this approach is quite inflexible, if the offering that the service provider puts on the table is not exactly to your liking or doesn’t adequately meet your needs, it would probably be better to explore other options.
2) Usage based pricing (Also called pay-as-you-go pricing, the more you use the more you pay): Ideal for businesses who need to scale up and down depending on demand, this Cloud Computing pricing model gives them the flexibility to do so with ease. This can make it harder for businesses to predict costs as excessive usage means sizeable fluctuations in your bill.
3) Tiered pricing strategy (Different “packages” offered at different price points to meet different needs): Here service providers offer a range of packages with different prices and features that businesses can choose from. Typically grouped into low, medium and high usage, customers can up or downscale packages depending on their usage. But there is a chance that you may select a package that doesn’t adequately meet all of your business’ needs.
4) Per user pricing (As the name suggests, the more users, the more you pay): The simplicity of this pricing model is perhaps the greatest appeal, each user costs a certain amount and the more users you have, the more you pay. For businesses this could end up getting pricey as you scale up your costs also increase, which could actually limit adoption.
Migrating to the Cloud should provide you with ways to shrink expenses without hampering growth. The key to making the right decision when it comes to Cloud Computing is ensuring that you know what’s out there. Our monthly newsletter is filled with business, telecoms and Cloud insights. To sign up, complete the form below.