What Are The Cloud Cost Models? A Simple Overview In 2021

Ajay Ohri


What are the cloud cost models? Cloud Cost Models are flexible as the demand and supply continue to vary. These rely upon various attributes and are cost-based, time-based, or auction-based. There are three cloud evaluating systems that are market-based, objective, and subjective. 

In cloud cost models, supply drives cost-based cloud model, demand drives value-based cost, though a balance of both market interest drives the market-based cloud model. A few people don’t know that there are various distinctive pricing models for cloud computing. Understanding these models is significant so you can choose which model to pick and see how you will be charged under each model.

  1. List of models
  2. Future of cloud cost models

1. List of models

Cloud cost modelling has research difficulties that incorporate moving from pure expense-based to both cost-based and value-based modelling. Allow us to comprehend what different cloud computing pricing model are:

  • Consumption-Based Pricing Model:

In this model, you pay for what you use and this is generally basic for the Infrastructure as a Service. Under these models, you just compensate for the number of resources you utilize, for example, network traffic, CPU time, and disk space.

  • Performance-Based Cost Model:

It is a course of action wherein the dealer pays dependent on the real execution of a cloud service or model. It is associated with the customer’s business result that depends on explicit execution measurements. Instances of this current model’s applications incorporate telecom services, for example, satellite connectivity, multi-party video conferences, mobile apps.

  • Subscription-Based Pricing Model:

In a subscription-based pricing model, you pay to utilize the service for a while regularly consistently. Your membership cost commonly takes into consideration unlimited use during the membership time frame. So, you pay a similar sum paying little mind to the measure of resources you use and this is the most widely recognized model for Software as a Service.

  • Auction and Online-Based Cost Model:

This model chooses to price. According to Asuncion Monahan, an Auction is a market instrument, working under explicit standards that decide who at least one thing will be granted and at what cost. It is generally transparent and faster, with no forward and backward handling steps.

  • Advertising-Based Pricing Model:

In an advertising-based pricing model, the service is no or at minimal cost, yet includes advertising. So, the client gets a heavily-discounted or no charge service and the supplier gets most of the entirety of their income from advertisers.

  • Service-Based Cost Model:

It underlines esteem conveyance with actual item-oriented pricing. This model is utilized in hospitals, insurance, travel, legal consultant, travel, airline, banking, etc. The service-based model’s value is estimated utilizing the unit of a priority, user, per device, tier, and level. The estimation of this model can be predicted and identified.

  • Market-Based Evaluating Model:

In this model, there is a market cost for a service, according to an hour of CPU time. The market cost fluctuates over the long run dependent on the demand and supply. As a user, you can use it straight away and purchase the service at the current cost. Or on the other hand, you can make an offer to utilize the service at a lower cost, and if the market value arrives at your value, at that point, your workload will be enacted and you will be charged at your offer cost.

  • Free Upfront and Pay Later Cost Model:   

The opposition among cloud specialist organizations is expanding alongside its interest. Many cloud specialist providers offer pay later and free upfront cost models to use their items with essential highlights to acquire clients and make benefits from premium customers. Three cost models are accessible viz. razor and blades cost model, freemium, and free product cost on advertising.

  • Customer Value-Based Cost Model:

It sets a cost from an emotional perspective on a customer focusing on the customer’s value delivery. There are 4 classifications of this model: hedonic, psychological, feature, and perceived based model. The development of these models depends on economics, psychology, sociology, and perception.

  • Retail-Based Cost Model:

It depends on a few customers that purchase from retail outlets or physical locations. It applies to the Business-to-Consumer model. It has 4 subcategories of cost model: discriminatory, promotional, product mixing, and discount & allowances pricing.

  • Expenditure-Based Cost Model:

An expense is settled on utilizing the application for a central component as a unit of charge. It has 3 kinds of cost models: percentage, target return, and cost-plus cost model.

  • Utility-Based Cost Model:

Clients need refreshed cloud models and oppose tolerating outdated hardware-based costing. They request remodel in agreements according to the metering of utility-based SaaS (Software as a Service), PaaS (Platform as a Service), and IaaS (Infrastructure as a Service) models. Cloud cost models change according to exceptional rebate alternatives and incessant value slices to pull in clients.

  • Resource-Based Cost Model:

This cost model relies on the utilization of services. It is one of the classifications of the cost-based expense model procedure.

2. Future of cloud cost models

As the cloud computing cost model evolves, so will the pricing models have utilized. The test for the business will be to make these more muddled models effectively understood and assessable.

Over the long haul, we may see even pure auction systems and more market-based systems. Different prospects that could eventuate incorporate a futures market, group buying, aggregation services, and price comparison sites for cloud computing services.

As guidelines, for example, OpenStack makes it simpler to move remaining burdens between providers, it’s conceivable that we’ll likewise see sophisticated deployment engines that acquire a service at the lowest price, query the market, and afterwards convey outstanding tasks at the lowest-price provider.


Scope of models from pure membership to resource-dependent on interest is accessible for clients. In the membership model, the instalment is charged if the customer utilizes services, however, cost models dependent available are set just when services are utilized. A mix of both can be furnished with membership offers to rely upon the cloud service provider.

Different difficulties are moving from transferring from mutable to immutable pricing, statefulness to stateless evaluating, and creating cloud pricing models that pull in cloud customers.

Jigsaw Academy’s Postgraduate Certificate Program In Cloud Computing brings Cloud aspirants closer to their dream jobs. The joint-certification course is 6 months long and is conducted online and will help you become a complete Cloud Professional.


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