What the Future of Cloud Pricing Could Look Like

By Matt West

Director of Telecommunication Services, NPI

March 24, 2016

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Artwork Courtesy of @iStock.com/nzphotonz

One of the toughest aspects of navigating cloud pricing is that there’s no standard – it’s still the Wild West. This also presents an opportunity for enterprises to shape the future of cloud pricing and subscription models.

First, let’s take a look at where we are today with cloud subscription and fee models. Some IaaS vendors, like Amazon Web Services, have built their pricing model to provide flexibility and scalability for customers. AWS’s cloud-based servers can be bought by the hour or they can be "reserved" for a year. The trade-off is that reserving a server for a year in advance will save a customer XX% over using that server on an hourly basis for an entire year.

Traditionally, telephony has also been sold this way. Customers may have to pay a subscription fee to get access to the network (a telephone line, PRI, etc), but then they were only charged for the actual consumption of minutes. Later, carriers began offering bundles of minutes that were "use them or lose them" but at a discounted rate. A customer could "reserve" 25,000 minutes per month at a discounted rate and it was up to them to maximize the consumption of those minutes.

Yet, when it comes to most enterprise SaaS offerings or cloud telephony services, true consumption-based models go out the window. In the case of SaaS, why does an enterprise customer have to subscribe to 10,000 seats for 36 months? Why can't they just add/delete seats like they buy minutes on a telephone network?

The same questions apply for cloud telephony. Why does an enterprise customer have to buy 100 SIP sessions? If a customer is paying for basic access into the network (let’s say they have a 100Mbps connection), then why can't they pay for SIP sessions on a one-by-one basis as they need them?

This elasticity is a critical need especially for those companies that operate in a seasonal business climate (retailers, distributors, etc.). For example, a retail call center may triple their number of agents during the holiday season. Why can't they subscribe to a base of 200 agents for nine months out of the year and increase that number as needed in busy months?

Enterprise customers should demand more flexibility in subscriptions and pricing from ALL cloud providers – not just their IaaS vendors. On-demand computing – in all its forms – is the clear path forward for IT. It’s time for pricing models to catch up.