Pricing Infrastructure as a Service and its Benefits

An optimized cloud computing platform, Infrastructure as a Service, or IaaS provides computing, storage, and networking plans on demand with users paying only for the quantum of resources used. All the benefits of the cloud are available on IaaS and among these are a reduction in the maintenance of on-premises data centers, gaining business insights in real-time, and lowering the costs of installing hardware.

The billing model used by providers of cloud-based Infrastructure as a Service is typically known as IaaS pricing. Several facets have to be considered before fixing the IaaS pricing by cloud providers. First, they calculate the operational expenses for obtaining the IT resources from established cloud-computing platforms and after this is decided, the IaaS pricing to be charged to clients is decided. The difference between the two is the profit of the cloud provider.

However, fixing the IaaS pricing is not easy. It is necessary for providers to carry out extensive market research first to make sure that what is fixed is as per the current market scenario primarily taking into account what is charged by the competitors. Only then can the right IaaS pricing be precisely fixed.

How do IaaS providers arrive at the cost of providing services before finalizing the IaaS pricing? The first step is to arrive accurately at the COGS (Cost of Goods Sold) which includes all expenses that are linked to the delivery of the IaaS services. These comprise the cost of utilities on which the IaaS offering will be built, the development cost of the IaaS, and the costs of labor for supporting the IaaS offering. The IaaS pricing can also be determined either on the pay-as-you-grow concept or the billable usage hours.

Now, what are the benefits of the IaaS that customers would agree to the IaaS pricing fixed?

The first is enhanced database performance as the cloud provider through the Service Level Agreement (SLA) ensures that customers get the best performance from a cloud provider's infrastructure. Highly optimized service through continuous and automatic upgrades assures the best possible service for businesses. Moreover, IaaS provides substantial savings in upfront costs of purchasing, maintaining, and operating hardware, leading to a considerable lowering of overall capital expenditure earmarked for IT spending.

The next is enhanced security as IaaS has in-built stringent data security norms with strict access guidelines rules for admission to physical locations, raised floor setups, and multiple modes of authentication. Other security measures in place are information security, end-to-end encryption, and encryption at rest for private and confidential data.

Finally, there is enhanced flexibility and scalability and users can scale up or down in utilization of resources whenever needed. This is automatically provisioned by IaaS and hence, it is not required to continually invest in additional infrastructure when growth takes place.

With all these benefits available at affordable IaaS pricing, it makes sense to invest in Infrastructure as a Service.