Cloud Price Models

 Margin and a factor for risk are added to the sum of all the costs to arrive at a price. The price will have two characteristics: a nonrecurring and a recurring element. The nonrecurring element of the price is converted to a recurring element by amortizing the net present value into a series of recurring cash flows. (The mathematics for doing this is considered toward the end of this chapter under the heading of Net Present Value.) These cash flows are then added to the recurring element to arrive at a monthly price point for providing the service to you. This recurring price point is expressed as the price model and this price is used to sell and market the cloud service. Broadly, let us categorize them as utility-, service-, perfor-mance-, and marketing-oriented models. Although cloud computing today mostly uses utility- and service-based price models, a wide range of models are considered be-cause financial and business innovation is bound to catch



up with technical innovation, thus enabling some of the less used models to enter the cloud computing domain in future. You may even choose to use or specify your own model in case you need to commission your own private, community, or hybrid cloud, after learning and evaluating all your options concerning the various price models dis-cussed below.

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