Pricing cloud IaaS services based on a hedonic price index

Abstract

Cloud computing, as an innovative business model, has experienced rapid diffusion across the international business world, offering many benefits to both the demand and the supply side of the ICT market. In particular, the public cloud approach receives more attention and the Infrastructure as a Service (IaaS) model is expected to be the fastest growing model of public cloud computing, as it is considered to be a very good solution for companies needing the control of fundamental computing resources, such as memory, computing power and storage capacity. Currently, the battle for a dominant market share grows the competition among cloud providers and leads to the development of new pricing schemes, in order to meet the market demand. However, the choice of the cheapest cloud hosting provider depends exclusively on the clients' needs and this is why prices for cloud services are a result of a multidimensional function shaped by the service's characteristics. Into that context, this paper summarizes the findings of an initial work on the construction of a price index based on a hedonic pricing method, taking into account different factors of IaaS cloud computing services, including two of the most important players in the cloud market, Google and Microsoft Azure. The aim of this study is to provide price indices both on a continent level and globally, in an effort to investigate differences in pricing policies in different marketplaces. Comparing the results leads to important conclusions related to pricing policies of IaaS cloud services.