Cloud Billing - Monetization
Cloud Monetization Models Cloud Monetization Models
Subscription model (Company provisioning) Subscription model (User provisioning) Pay As You Go (Usage based) Combination of the above models
Subscription Based Billing (Company Provisioning)
Subscription Model (Company Provisioning) • Concept: – Flat Rate Billing , typically monthly Recurring Revenue.
•
Pros: – Suits CSP’s moving to the cloud as they understand that SaaS is generally a recurring revenue business – Suits cloud consumers instead of upfront investments on licenses + maintenance fees
• Cons: – Inadequate for providers who need to bill based on consumption – Not beneficial for customers who expect to be charged based on the consumption behavior
Subscription Based Billing (User Provisioning)
Subscription Model (User Provisioning)
• Concept:
– Based on the actual number of users assigned to the SaaS service
• Pros: – Enterprise benefit as billing starts when provisioned to individual users – Model is reflective of the enterprise’s license pattern
• Cons: – SaaS software entitlements need to be managed – May not be useful to CSPs as it may result in loss of revenue when licenses are not assigned to enterprise users
Usage Based Billing
• Concept:
Usage Based (PAYG) Model
– Based on the actual usage of the cloud service
• Pros: – Pay only for the actual volume of resources consumed – Possible to optimize and control cloud spend by governance
• Cons: – Enterprises have difficulty in predicting the cloud expenses – A bill shock likely without effective policy control and enforcement – Metering the usage and providing granular details is complex for CSPs/Resellers
Subscription Based (Company) + Usage Based
Subscription Based (User Provisioning) + Usage
Single Service with Flat Rate + Usage