two reply

Understanding of cloud cost metrics and pricing models will help in performing accurate financial analysis of cloud adoption plans. The pricing structures used by public clouds are typically based on utility-centric pay per usage models enabling organizations to avoid upfront infrastructure investments. The cost metrics in the cloud is split into two categories. First, business cost metrics which begins with common types of metrics used to evaluate the estimated costs and business value of leasing cloud-based IT resources when compared to the purchase of on-premise IT resources. Further said categories is split in two, up front and on-going costs. Up-front costs are associated with the initial investments that organizations need to make to fund the IT resources they intend to use. Includes both costs associated with obtaining the IT resources as well as expenses required to deploy and administer them. Whereas on-going costs represent the values needed for an organization to run and maintain IT resources it uses. Several more cost to consider besides the above mentioned are, cost of capital, sunk costs, integration costs & locked in prices. (Thomas Erl, 2013) (Butler, 2013)

Cloud usage cost metrics describes a set of usage cost metrics for calculating costs associated with cloud-based IT resources usage measurements like network usage, server usage, and cloud storage device and cloud service. Provider of IaaS and PaaS environment tends to provision virtual servers with a range of performance attributes that are generally determined by CPU and RAM usage. Cost management in the cloud is connected with different cloud services served by the environment. Both cloud providers and cloud consumers can implement cost management systems that reference or build upon the lifecycle phases. (Butler, 2013) (Thomas Erl, 2013)

Pricing model used by cloud providers are defined using templates that specify unit costs for finely grained resource usage according to usage cost metrics. Market competition and regulatory factors are always must consider as they affect pricing models to an extent. Commonly primary cloud providers serve with stable prices even when their expenses are volatile. How cloud services are measured and calculated are specified in the pricing template stating standardized costs and metrics. Price templates define a pricing model structure by setting various unit measure, usage quotas, discounts and other codified fees. Variables like cost metrics and associated prices, fixed and variable rates definitions, volume discounts, and cost & price customization options determine pricing models. Price templates are crucial to consumers that are appraising cloud providers and negotiating rates since they are depended on the adopted cloud delivery model. (Thomas Erl, 2013) (Butler, 2013).