Posts Tagged Pricing

AWS doesn’t want you to cloud burst

AWS doesn’t want cloud bursting, where customers come to the platform and retreat to their on-premise infrastructure when the work is done. AWS is keen to get you to commit to longer term reserved instances and is adjusting their pricing accordingly.

There is nothing like a price drop in Jeff Barr’s midnight AWS announcements to get everybody excited in the morning. What interests me is not the price drop per se, nor the inevitable demand for competitors to follow, nor the back and forth comparison with traditional managed hosting that will get underway (again). What is interesting is the increasing differential between the price drop for on demand versus reserved instances.

As James has pointed out, reserved instance pricing is important in developing a cost model for cloud applications and over time, but the gathering of data and analysis can get a bit tricky. EC2 reserved instance pricing page reckons that reserved instance pricing will save between 50% and 70% of your EC2 costs (RDS has similar savings for reserved databases) — which is a compelling proposition.

Anecdotal evidence (read “I may or may not have heard it somewhere”) suggests that a lot of AWS business is for cloud bursting — where AWS is used, not as the primary platform, but one to use occasionally. It would also seem that the ‘occasionally’ refers to development and test capacity, rather than an architecture engineered to use AWS as a true cloud bursting platform for a production system. By creating a huge differential between on demand and reserved instances, AWS may be presenting the teaser to convert those ‘cloud burst’ uses into long term deployments. After all, if it is cheap enough to use on demand (which it must be otherwise customers would build their own) then being able to drop the price of something that customers know works (technically) by an additional 50% may push the decision makers in favour of AWS. But those savings only come from long term commitments (3 years), which is enough time to ensure that the particular application is committed to AWS, with others to follow.

While reductions in cloud costs are welcome, the fundamental problem of figuring out the costs, cost benefits and ‘in the box’ comparisons continue to be difficult. I have discussed this as an engineering problem and people always wade dangerously into the debate, as Jeff Barr did recently, and there is some tricky analysis required. Pricing is still far to complex and the models too immature to be convincing in front of the CFO, or whoever controls the budget, and private cloud advocates, who have been doing pricing for a while, can almost always bulldoze a public cloud pricing model. Rather than only a few pennies saved on EC2 savings, I would like to see some rich, capable pricing tools and models emerging.

Simon Munro




Cloud costs are an engineering problem

Head over to the new Google App Engine pricing that will come into effect when App Engine comes out of preview later in the year and you see a list of prices similar, in format at least, to pricing for AWS, Azure and other cloud providers. That seems fairly straightforward until you look at the FAQ that describes the pricing in more detail that, while answering a lot of questions, gives explanations that give rise to even more questions.

It seems that Google is switching over to an instance based pricing model from a CPU based one, but there are differences between different frameworks – where Java handles concurrent requests and Python and Go do not (yet). In addition the FAQ makes observations about the change in pricing that will affect current apps that are memory heavy because they have been designed to optimise the CPU pricing and may land up being more expensive under the new model. Then there are reserved instances, API charges, bandwidth, premier accounts and a whole lot of other considerations to add to the confusion. Even if you are not interested in App Engine it is a worthwhile read.

I have done and seen a few spreadsheets to try and work out hosting costs for cloud computing and they reach a point of complexity with so many unknowns that it becomes very difficult to go to the business with a definitive statement on how much it will cost to run an application. This is particularly difficult when development hasn’t even started yet, so there is no indication of the architectural choices (say memory over CPU) that affect the estimates. While AWS make be easier in some sense because the instance is a familiar unit (a machine yay big that we put stuff on), there are still many considerations that affect the cost of hosting. Grace an I struggled with a particular piece of SOLR availability and avoided using a load balancer for internal traffic until we ran the numbers and worked out that it would cost pennies per day in bandwidth costs so decided to use ELB after all – and that is one of the simpler pricing architectural decisions. Trying to build a scalable architecture out of loosely coupled components that makes optimal use of the resources available is very difficult to do.

We could ask vendors for better or more flexible pricing models. We could have estimating tools that allow us to estimate costs based on a choice of ‘similar’ application models. We could trade SLAs for cost as S3 reduced redundancy does. We can hedge out costs using reserved instances. We could run simulations (given the on demand availability this is relatively easy). We could have better tools to analyse our bills (as Quest has for Azure). We need all of this but ultimately the pricing of cloud computing is going to remain complex and will increase in complexity in future, leaving the big decisions up to the technical people doing the implementation.

Cloud expertise needs to extend beyond knowing your IaaS from your SaaS and experts need to have a handle on all aspects of cloud computing architectures, for a specific platform, in order to realise the benefits that cloud computing promises. In the context of developers being the new kingmakers, it is developers, software architects and DevOps that are the only ones close enough to the metal to make the decisions that ultimately affect the cost. Where currently developers optimise at the cost of development time (which is largely discouraged), we may want developers to optimise CPU against memory against latency against bandwidth against engineering effort, and even, at a push, against environmental friendliness in future. Let’s not even get into having to adapt to providers changing pricing models periodically. It is going to take some serious skill to pull that together – from the entire team.

So while the cloud computing marketers make it sound easy to put our apps onto the cloud there is a long road ahead in developing the necessary skills to ensure that it is done optimally and at a cost that is reasonable across the life of the application. There are business cases that could collapse under spiralling cloud costs if we pull one lever incorrectly.

Simon Munro



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