Cloud computing was introduced as an idea for offering computational power as a utility like water or electric service. First proposed back in 1961 at MIT’s Centennial Celebration, professor John McCarthy envisioned computing as a public utility. “Each subscriber needs to pay only for the capacity he actually uses … The computer utility could become the basis of a new and important industry.” Amazon Web Services (AWS) offers utility-like pricing in that subscribers can only pay for what they use.
However, depending on the user, Amazon also offers additional options to help businesses leverage large amounts of computational power, while minimizing costs.
If you're evaluating new solutions to modernize your legacy system or simply doing research on what to expect for cloud computing costs, you're on the right track.
Here are a few of the different options Amazon offers for AWS pricing:
AWS offers on-demand pricing for many of its cloud computing offerings. With pay-as-you-go pricing, businesses get to pay only for what they use. This pricing model has no minimum commitment and also avoids locking clients into long-term contracts. For computing resources such as EC2, users pay for computational power on an hourly basis. For data storage and data transfer needs, customers get to pay for space on a per-gigabyte basis.
This option is ideal for businesses that have different projects all with varying computational and data storage needs. This option is also ideal for small businesses or startups working with extremely limited budgets as it allows companies to pick and choose when they are going to launch their cloud projects, based on their disposable income for the month. With pay-as-you-go, you only have to budget for what you use.
Tiered Pricing by Unit
For companies that need access to set amounts of space for data storage or for data transfers, Amazon offers tiered pricing for select AWS services. For example, a customer can pay a set rate for a set amount of storage. Say a company needs 1 terabyte of space per month. With tiered pricing, customers get to pay $.0300 per gigabyte (charged monthly). If the company needs more space, they move up a tier.
For example, for standard storage, if a company needs more than 1 TB but less than 49 TB of space, they will pay a set rate of $.0295 per GB. The more storage you need, the less you pay per gigabyte.
Infrequent Access Storage, storage that is only accessed occasionally and Glacier Storage, ideal for archive data that rarely needs to be accessed are charged at rates even lower per gigabyte.
Specifically for Amazon EC2, Amazon offers Reserved Instances pricing which allows a customer to reserve computing capacity, in advanced, for a period ranging from 1 to 3 years (Or even fractional days / weeks / months now with Scheduled Reserved Instances available). Reserving in advance can provide customers with up to a 75% discount off services compared to on-demand pricing.
Even though clients are committing to a set amount for an established period of time, they still have a lot of flexibility for making said payments. Customers can choose to pay as-they-go at a rate based on their set reserve commitment, or they can make a partial up-front payment at a lower rate, or they can choose to pay the entire amount up-front for even more cost savings.
To learn more about how your company can optimize IT budgets with AWS pricing options, contact Privo IT today.