Cloud Service Pricing Strategy Based on Service Level Agreement with Default Compensation

Abstract

The emergence of cloud computing has completely changed the entire IT world. There is no doubt that making a profit is a cloud service provider (CSP)’s ultimate goal. To make a profit, a CSP needs a reasonable pricing strategy. At the same time, in order to increase the attractiveness of cloud service, CSPs tend to write default clauses in the service level agreement (SLA) and the default cost will affect the profit of CSPs. To determine an optimal pricing strategy, this paper builds some bi-level programming models of CSPs and users. The basic model does not consider default compensation and the default cost is included in the extended model. Finally, the comparison results of the two models prove that it is significant for the CSP to set default compensation clauses.