Cloud Economics: Optimizing Cloud Applications For Improved Price-Performance Metrics

Aug 31,2022 by Neha Dubey
Cloud Economics

Managing cloud expenses is one of the most challenging tasks of cloud computing. When adopting public cloud IaaS and PaaS, enterprises are billed continually as usage occurs. In cloud computing, estimating costs is tricky. Organizations get bills that they cannot actually comprehend. 

More often than not, they even fail to identify spending items. When moving to the cloud, most businesses are unaware of the hidden costs because cloud deployment types, such as private, public, or hybrid clouds, are used. As a matter of fact, financial management is typically neglected until spending spirals out of hand.

So, if you’re also struggling to understand Cloud Economics, read this post.

In this post, we will learn about Cloud Economics to optimize cloud applications for better price-performance metrics.

So, let’s get started… 

What exactly does cloud economics mean?

Cloud economics is the study of the costs and advantages of cloud computing, as well as the economic principles that support both of these factors. As a discipline, it explores key questions for businesses: 

What kind of return on investment (ROI) can we expect from moving our operations to the cloud or switching cloud providers entirely? 

And how does the total cost of ownership (TCO) compare between a system hosted in the cloud and a more traditional solution hosted on-premises?

The manner in which cloud computing is deployed and managed is critical to its successful operation.

That’s why companies must have a solid grasp of the economics of cloud computing. It will help them maximize the return on their investments and derive the most benefit for their companies.

Different types of Cloud Computing Pricing Models

Cloud computing offers three distinct pricing models: tiered pricing, per-unit pricing, and subscription-based pricing. Each of these models has distinct advantages and disadvantages. Here is a brief explanation of all three: 

  1. Tiered Pricing: Cloud Services can be purchased at a number of different price points. Every tier includes an option to fix service agreements at a predetermined price. 
  2. Per-Unit Pricing: As the name says, the pricing in this model is determined on the basis of per unit usage. This model utilizes the unit-specific service notion as its foundation. This model accounts for the transport of data as well as the allocation of memory for particular units. 
  3. Subscription-based Printing: Under this model, customers are required to pay recurring subscription fees in order to make use of the product.
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What does cloud computing cost include?

Cloud Computing costs typically include the following:

  • The labor required to migrate to the cloud
  • The size of the instance
  • The data center selection
  • The cost of the operating system
  • The bandwidth fees, among other things. 

When making a cost comparison between deploying an application in-house or using traditional hosting, you must also take into account the costs of administration, power, cooling, staffing, and data centers. Doing so will help you have an accurate picture of the total cost of cloud deployment. 

How can organizations keep cloud computing costs under control? 

Organizations need to build financial management processes in order to keep costs of public cloud infrastructure as a service (IaaS) and platform as a service (PaaS) under control. They must prevent excessive spending and drive more effective utilization of cloud services. 

Moreover, the selection of instances must be carried out only on the basis of the utilization needs. 

Aside from these, the methods that are listed below can assist cut recurring costs or bills. 

First, IT and finance managers at a corporation should calculate the return on investment (ROI) and total cost of ownership (TCO) of cloud computing. The following three components should be included in the process:


Calculate how much it costs to run your present data center, including labor costs, capital expenditures throughout the course of the equipment’s lifecycle, and any extra maintenance and operational costs, such as licenses, software, and replacement parts. This will serve as a benchmark for future improvements.

Cloud costs

Make a cost estimate for the potential cloud infrastructure that you’re looking at (public cloud, private cloud, hybrid cloud, etc.). Ask for the prices from your vendor. Take into consideration continuing fees, labor and training costs, ongoing integration and testing of apps, as well as security and compliance.

Consider the expenses of migration

Find out how much it will cost to switch to the cloud. These expenditures must include labor and expenses for testing and integrating applications.

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Once you get these costs, it’s time to analyze the total cost of ownership (TCO) of various cloud architectures and use cases. 

Aside from these, make sure to consider the following:

  • Make sure the solution you choose for cloud computing is suitable for your company and the way you put in your hours.
  • Never opt for an outdated cloud computing service to save a few dollars.
  • Lastly, steer clear of services that aren’t necessary but are nonetheless putting a strain on your finances.

What do you need to know about cloud economics? 

When it comes to cloud computing, gaining an understanding of cloud economics can provide you with a significantly more nuanced comprehension of your capital and operational expenditures. 

However, you should also explore the ways that cloud computing might enhance the productivity of software developers and computer engineers. 

Know that cloud economics go beyond simply reducing cloud computing costs; instead, it focuses on achieving business goals through increased speed and agility. 

Having this level of understanding of the bigger picture will assist you to choose the cloud solution that is most suitable for your business. 

Wrapping it up…

Cloud computing has gained immense traction in the past few decades, and for all good reasons. It is crucial to make an informed decision about which cloud computing service provider to use so that you may avoid additional challenges and hassles.

And if maintaining cloud economics seems a task, then contact our team of experts. We at Go4Hosting, are dedicated to providing you with the best and most affordable cloud computing services. 

Contact us for more information on our services! 

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