How to price cloud services

Cloud computing services have been around for a while now, but it's only recently that businesses have started to realize their potential. The cloud can be used in many different ways and is often less expensive than traditional options. This post will assist you in how to price your services so you can maximize the ROI of using cloud technology.

How do you determine the price of your cloud services?

When you're pricing your cloud services, it's essential to consider the three biggest cost centers related - storage, network, and computing. Let's discuss each factor in detail below:

Network: Cost per Rack Unit

When setting prices for cloud services, you need to determine the expense to maintain your network. Thus, it is wise to start by calculating costs for network maintenance, hardware, network infrastructure, and labor. You should add all these expenses and then divide the total by the number of racks that a business will need for the cloud service. Some factors that you should include in the costs are:

Network hardware costs: Remember that every virtual server needs investment along with specific network hardware. The provider purchases that hardware and depreciates the cost over its working life.

Network infrastructure maintenance: When pricing cloud services, don’t forget about network maintenance. These expenses include security tools, firewalls, LAN switching, patch panels, load balancers, routing and uplinks, and other devices and tools that you need to keep the network up and running smoothly.

Labor: This includes the cost of your staff required to maintain, manage, monitor, and troubleshoot cloud computing services and infrastructure. This staff must remain available 24x7 for customers to ensure uptime and system availability.

Compute: Cost per GB of Virtual RAM

Each organization has different requirements, including CPU use. When you monitor the cloud service market, you can easily identify that many service providers calculate the CPU cost by defining the respective company’s expense per GB of virtual RAM, which also includes:

Hardware operation: Cloud service providers consider the total virtual RAM deployed in the clouds and then divide that figure into the cost per rack unit of the hardware. You can also include licensing and usage costs as per your virtual operating system.

Hardware acquisition: This means how much it costs to get hardware for each GB of virtual RAM that you will be providing to clients or using at your place.

Storage: Cost of Virtual Disk Per GB

Storage costs are the same as computing costs. You will have to calculate how much it costs to maintain and operate your storage hardware as per storage needs.

Shared Costs

Your individual cloud computing costs are not all that goes into your price quote. Like IaaS users, you need to charge for power and cooling of the underlying infrastructure in your data center as well when pricing your cloud services. Similarly, your final invoice may include software license charges too.

How we can help:

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