Pricing cloud IaaS computing services

Abstract

The economics of cloud computing has recently attracted increasing attention. In particular, a topic which is still under debate is how prices charged to customers for cloud resources are formed, since alternative pricing rules could be considered. Based on three pricing schemes inspired by those used by Amazon EC2, the main global cloud service provider, in the paper we address two main issues. First we present a methodology for the relevant parameters of the pricing rules to be determined in an optimal way, that is to maximise the provider’s revenue. Moreover, we discuss reasons for co-existence of three pricing rules, rather than fewer, to access the cloud. Our findings suggest that this may be due to a larger coverage of the potential demand, since customers applying for cloud services vary in their willingness to pay for the job, the time length of the service, the computational power requested etc. Furthermore, the pricing rule in the so-called, spot market, can provide the platform with useful information on the customers willingness to pay for cloud services. This is because in the spot market users offer a price for service, but pay less than that if their request is satisfied.