Every product or service that your business provides to your customers has a life cycle that comprises of develop-ment, testing, launch, marketing and normal business us-age. During each of these phases, differing demands are placed upon computing so that you will have periods con-sisting of peaks and troughs over the entire life cycle. To ensure that you meet all these demands, you will need to invest and disinvest in overprovisioning compute capac-ity. In any case, there will inevitably be periods where the demand will simply be unmet—especially during product Over time the general trend in price for computing—re-gardless of whether it is traditional or cloud comput-ing—is downward. This is because of newer technologies coming onto the scene at a fast pace and on a regular ba-sis. Another contributing factor to the downward trend
the economies of scale resulting from the adoption of new technologies as the older ones reach obsolescence. Cloud computing gives you the ability to further introduce a step change to the downward price curve by using different price models as your needs and volume requirements change. So, for instance, at lower volumes, a consumption price model might be optimum for you, whereas a performance price model might be more suitable at higher volumes. Having the choice to change the price model, either using the same cloud service provider or moving to another, al-lows you to receive more value for money. Thus the price flexibility value model of cloud computing, as depicted in figure 14, uses different price models to lower computing costs over time as demand, volume, and circumstances change. Tiered and hybrid models are examples where the cloud service provider takes advantage of this to offer you greater discounts with increases in volume.