Enabling the Pay-per-Use Model on the Cloud

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Cloud Computing is an IT concept that experts have yet to exactly define. Nevertheless, it is still a new computing paradigm which simplified the management of offering resources and services to the general public, emerging as a technology that most IT professionals strive to analyse.


Cloud Computing is at its early developmental stages and so far, efforts have been devoted into developing its functionality in order to provide easy access of services to end users within certain focused contexts. The pricing and economic models behind cloud systems are yet to be studied and supported. A systematic study and analysis of the cloud economy is missing.


This study aims to provide a platform to support the cloud computing economy. Existing cloud economical solutions, pricing models and financial instruments used in the conventional economic systems such as the commodity and utility market were thoroughly scrutinised and analysed. The results garnered were used to design a flexible and generic cloud economic support system that was deployed and tested on top of the IC Cloud Infrastructure. After thorough examination and testing, this support system was proven to be an effective tool which can assist further researches and studies on different pricing and economic models that could potentially benefit the cloud industry.


I would like to thank:

  • My supervisors Yike Guo and Li Guo for providing me with most welcome support throughout my project.
  • Daniel Kuhn for his explanations on utility pricing models.
  • Antony Teoh for helping me with some aspects of the implementation involving XML schema and JSP.
  • Discovery Science research group members: Xiangchuan Tian, Michelle Osmond, Ghanem Moustafa, Anthony Rowe for their valuable support and feedbacks.

1.             Introduction

Cloud Computing is regarded as the next wave of IT evolution for individual researchers, companies, and governments. The wide scope of computing resources provided by Cloud Computing has opened up a whole range of opportunities for every field of study, from scientific research to financial services.


One of the controversies floating around the cloud computing community is whether cloud computing is going to be the next hot commodity. In fact, many are convinced that rapid growth of Information Technology is turning computing services more and more into a commodity provided through utility-like services.


A century ago, most companies operated by generating their own power source. However, in the 1930’s, almost all businesses decided to rely on the electricity supplied from a national grid. Initially, many companies worried about outsourcing their needs to an external supplier, but soon they realised that in-house generation was no longer cost-effective. Today,electricity is accessible by a simple press of a button on a switch. We don’t need to be an expert or have total control over the technology and infrastructure that delivers our power. This case also applies to the current status of cloud computing. Cloud service providers can deliver computing power in a much more cost-effective manner compared to most interval IT infrastructures. Through cloud computing, companies can turn massive and risky investments into more predictable and manageable variable costs. In addition, Cloud Computing can easily be implemented as well, for it does not require advanced IT skills.


After leading cloud provider Amazon launched their Spot Instances service, the path to commodity computing has become clearer. Through this first step, the idea of utility computing and cloud commoditization is becoming more of a reality. As cloud computing turns into a commodity, financial products and their derivatives – such as forward contracts, future contracts and options – can be brought into the market. Cloud computing users can then be the end-users who consume cloud computing resources, and the investors who can make profit by trading the financial products of cloud computing as well. Furthermore, various economic pricing models from the real world market can be adopted by Cloud Computing to provide more opportunities and better services to end-users.


Several Cloud Computing providers are now offering a number of cloud hosting products, implicating variety among the virtual machine instances which are to be purchased and consumed on a Pay-per-Use or Pay-as-You-Go basis. These instances can be launched in minutes, and can be removed just as fast.



It is possible that a combination of the global economic downturn and climate change are the factors which changed the way IT is delivered. It is a certainty though, that cloud computing will accelerate the pace of this change.


This report will explore the different phases of the project from the background research phase to the conclusion phase, providing an insight into the different pricing models that can benefit both cloud service providers and end users.


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3     Conclusion & Future Work

3.1           Conclusion

Cloud Computing is a new innovative technology that is still to be fully studied and developed. For this reason, cloud service providers are driven to contribute to the cloud computing world’s growth by improving their services. With the demand for improvement and development, deploying an architecture that is market-oriented, supply and demand directed, and quality-of-service regulated is now proving to be critical.


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This project studied how different economic and pricing models can be applied to cloud computing. It analysed several pricing models by going through the literatures of commodity and utility markets and found several models that can be directly integrated to cloud computing as they share large amount of common properties. These are Pay-as-You-Go, Pay monthly, Pay-per-Use, and creating Spot and Forward contracts. These findings made new areas of cloud computing economics more feasible.


Based on the study, a system that supports these models for cloud economy was delivered. This system covers main business aspects of cloud computing including:


  • Dynamic pricing/business models support: The system is designed in a pluggable manner so new components can be adopted at run-time. This largely improves the flexibility of the system.


  • Metering and Billing: The usage of different cloud resources (CPU, Memory, I/O, Network, Disk Volume, static IP, and elastic giant storage) is metered and this data can be easily accessed by both cloud service providers and end users at any time through a web-based portal. The model of utility computing separates the billing mechanisms from traditional forms of dedicated or shared server hosting. The cloud billing system is able to calculate usage costs based on dynamic use, and then generate invoices or bills and carry out necessary actions on the user’s VM instances according to their selected pricing plans. One distinction separates different cloud computing providers’ services is not just the price of specific resources, but what resources and how these resources are actually metered and billed. In general, a cloud billing system should be able to provide a more flexible and scalable tool that is essential for any cloud computing service.


  • Scheduling: A genetic time-based scheduler that supports different pricing models has been developed. It also serves the implementation of spot and forward market as these sorts of markets are heavily time-sensitive.



At present, this economic support system exposes its functionalities through a common user interface.


In conclusion, the study has developed a cloud economic support system and proved it to be successful after a period of extensive testing. Presently, it is deployed on top of the IC-Cloud infrastructure and directly benefits the IC Cloud with all the aforementioned features.


3.2           Future Work

Cloud computing technology is still in an evolving stage, a large amount of research can undoubtedly be done in various areas such as cloud security, economic and pricing models, and resource scheduling.


Cloud Computing Economic and Pricing Language

Today, many e-commerce businesses are still not completely market-oriented since all the pricing models and mechanisms for trading goods between buyers and sellers are predefined and set by the e-marketplace providers. Throughout this project, I have been trying to find a genetic solution of creating a system that simply allows cloud infrastructure providers, software providers and service providers to publish their goods and services using their own pricing models and mechanisms in the cloud marketplace.


A possible approach is to design a cloud computing economic and pricing language, by which any economic and pricing model can be described. This will enable end users (marketplace users) to develop and evolve their own models in the IC-Cloud marketplace.



Cloud Computing Resource Exchange Platform

As the path to commodity computing has become clearer, it will be essential to have a cloud computing resource exchange platform to offer spot, forward and options contracts for cloud computing resources.


Cloud computing resource delivery differs from that of common commodities such as metal and agricultural products. Cloud computing service providers may have different cloud architectures and system environments. In addition, their most difficult challenge is to seamlessly transfer workloads and data from one provider to another upon delivery.

One possible solution is to establish delivery standards that all cloud service providers have to follow if they want to list their computing resources on the cloud computing resource exchange platform.



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