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.
Highlights
One of the most remarkable phenomena in information technologies that took place over the last few years is cloud computing [1]
In the paper we compared three main pricing schemes for cloud services, taking inspiration from those adopted by Amazon for its EC2 cloud platform, providing Infrastructure as a Service (IaaS) services
Though related to Amazon, the analysis can be of more general interest, for analogous pricing rules used by other cloud services providers
Summary
One of the most remarkable phenomena in information technologies that took place over the last few years is cloud computing [1]. As we shall see below, this is because we assume the user to be uninformed (uncertain) about the spot price value and its formation, since he does not know how many requests the platform receives and how many cloud resources are available Because of such uncertainty we suppose that strategic thinking could not take place, and the decision on which q to offer based on the idea that the spot price st is an exogenous random variable. Suppose the customer pays no cost in case of job interruption When such functions correctly represent the distribution of the spot price, for both the user and the provider, it follows that the customer’s payoff. Πs(v, τ), for a job of time length τ, when buying machine time on the spot market, is given by
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