This pricing model relies on two components, a base component and a reusable component that the base component needs in order to deliver a service. It is akin to selling you razors cheaply, or even giving them away for free, and then making up for it from the prices of the consumable blades. Printers are another example; they are sold cheaply, but the price is made up from the printer ink supplies. In cloud computing, a device or an app that uses a cloud service may be given away, but the price may be made up from the data that is stored, analyzed, and presented by the cloud service. For example, you could have a blood pressure monitor that sends data automatically to a cloud service. The cloud service would then store and analyze the data, which it would use to alert you if a certain blood pressure level were traversed. The sensor could be provided for free or at a reduced price whereas you would pay for the us of the cloud service that makes the sensor information meaningful to you. Another example of this is Amazon’s kindle that can act as a window to a virtual storefront from which you could purchase a wide variety of goods. The kindle device is sold at a discounted rate, and is called a loss leader, but its value is made up from the increased sales revenue in the storefront that results from its use.
Hybrid Price Models
The utility, service, and performance price models -dis cussed above are not mutually exclusive; they can be com-bined to produce hybrid price models. For instance, you could have a subscription-based system that utilizes a tiered approach. If the dollar spend per annum were to be at a certain level, then that level would decide the discount tier that would apply to you. One other approach would be to combine the risk transfer of the fixed model with the affordability of one of the utility price models to pro-vide a fixed, monthly, price to the user such that they may consume as much of the service as they wish for that fixed monthly fee. This type of hybrid price model is quite com-mon to many public cloud services such as Google docs and Microsoft Office 365. In fact this is a good pricing model for large or long-term services, especially if they need to be perfected over time. The hybrid price model can be applied successfully to all the cloud abstraction levels and deploy-ment models.