Service models use the benefit delivered to you, such as the SLA realized, risk transfer, or money saved, as the cri-teria for defining the price you pay for the cloud service. Broadly, the fixed price model is a risk transference model whereas the other two models discussed—volume and tiered—largely provide money and service benefits to youas a cloud user.The price that you pay for this service is fixed on a yearly, quarterly, or monthly basis. The fixed price can be made up of two components: recurring and nonrecurring prices. The latter is a one-off amount that you pay at the outset followed by recurring payments at regular intervals. The fixed price model is generally chosen when you have a clearly defined scope that is aligned to your short-term goals. Although this is used to transfer your risks related to delivery, people and quality, you will still own the risk of the service’s scope by deciding how much of the service to use and to what extent. The risk transferal occurs through the SLAs that you define and agree with the cloud service provider.
Fixed Price Model
Fixed pricing can be used well for all cloud deployment models and abstraction levels.Volume can relate to the number of users, amount of storage space, speed of transactions (denoted as number of transactions per minute or hour), amount of bandwidth, or processing power utilized, for example. Any one of these parameters can be used as the basis for deciding the price you pay for the cloud service. Because volume varies over time, business cycle, or events such as a marketing drive, the price periodically changes. It is therefore imperative to define, calculate, and measure it. For instance, the price for a thin-client computing service where your employees use cloud services on a volume-based price model could be calculated on the basis of average users, peak users, allocated users, or concurrent users per day, or a combination of these.Tiered Price Model The tiered price model uses a tiered form of pricing that is based on SLAs, volume, or amount spent. It is similar to the tiers that airlines have for their membership levels that are determined by the amount you spend on travel with the airline. With cloud computing a similar form of tiered pricing can apply with greater discounts provided that you spend a certain amount each year. Alternatively, you could have tiers based on the SLAs such that the more stringent the SLAs, the more you pay.