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I'm working on a cloud platform, and was curious what people prefer in terms of paying for web services.

There's the option of very simple pricing (tiers and such), which is easy to project costs on, easy to compare, but (possibly significantly) more expensive for the average user, because you're always either underpaying or overpaying.

The other option is a complicated pricing structure with many different factors, a lot harder to project costs on, but you're literally paying only for what you use, so it comes out to a lower price for the average user.

Which do you prefer?

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For my personal use, or a large corporation? My answer would be different depending on that. –  David Thornley Oct 15 '10 at 15:18
    
Both, really. I want to appeal to both markets. But, of course, most of the users will be using it for personal use. –  dkulchenko Oct 18 '10 at 4:01
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4 Answers

up vote 1 down vote accepted

Like all good questions, the answer depends. It depends on your application: Is it something you are likely going to be using periodically? A lot on some days of every month and very little the rest of the month? Once a year? Then a pay-as-you-go model would be 'nicer'.

It also depends on the sophistication of your users. Will they bother to do the mental arithmetic if you explain the PAYG model to them? Will they care?

How much will your users be spending? $5? $10? They might simple not care for that amount of money to optimize their experience and would probably rather go for something that is simple or easy.

Could the two models make a differences as large as $1000? Then you might find people are more than willing to have a look at the PAYG terms...

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I like simple and cheap. $20 a month is simple for what you get. Which is a 256MB VPS with a blank install of your choice of Linux. (This is Slicehost).

Simpler in my mind is always better, and I'm willing to pay for the simplicity. That same server from Rackspace costs $0.0015 an hour, 24 x 30 = ~$11 a month. What do I get for the extra $9 from Slicehost? No bandwidth charges. I get simple hosting for what I pay for.

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Slicehost is now owned by Rackspace. So apparently Rackspace prefers to offer both. –  bogeymin Oct 16 '10 at 0:13
    
@bogeymin: I know that Rackspace owns Slicehost, but it's a subsidiary. My big point is that they bundle bandwidth and can give me a flat monthly cost. –  Josh K Oct 16 '10 at 0:26
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It depends on what is the cost difference and whether it is worth my time to figure out that cost difference. If it is a matter of $10-20/month, then I surely dont think its a big deal for most people and they would prefer simplicity over cost.

On the other hand, if its a matter of a few hundred/thousands dollars per month, I would definitely not mind taking the time out to figure what I exactly need and what I don't.

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Currently, everyone is focusing on the enterprise corporate market for the high ticket items. For some reason the pricing always seems to get complicated. Not really sure there is a market for average user at this point. Cable TV and Cell phones still are a billing mess for the average user; I have no idea what company plans are like.

With extended usage, these contracts will continue to get renegotiated. Eventually they'll get easier.

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