What is IaaS and How Does Its Pricing Model Work

IaaS or Infrastructure as a Service is a form of cloud computing service that provides the necessary computing, storage, and networking resources on demand on a pay-as-you-use basis. Being on the IaaS helps an organization reduce the maintenance of on-premises data centers, gain business insights in real time, and lower hardware costs.

IaaS pricing is the billing model used by providers of IT infrastructure services via the cloud. The vendor has to meet several requirements before successfully fixing the pricing for services. The first is to know what will be the operational costs of the physical IT resources to determine the sale price. The second aspect of fixing the IaaS pricing model is to determine the profit margin for its services. For this, all the operational costs of the business have to be taken into account.

Additionally, to arrive at precise IaaS pricing, it is necessary that the provider carry out detailed research to make sure that the pricing is relevant to the current market scenario based on an analysis of what the competitors have to offer. Only then will providing the IaaS be a feasible proposition.

There are several considerations to be determined before calculating the IaaS pricing. One is to accurately arrive at the COGS (Cost of Goods Sold). This includes all expenses that are linked to the delivery of the IaaS services. The most common ones are the cost of utilities on which the IaaS offering will be built, the development cost of the IaaS, and the costs of labor for supporting the IaaS offering.

Many providers base their IaaS pricing model on the billable hours of usage while others relate it to the pay-as-you-grow concept.     

Location: United States

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