Costs and pricing
Pricing of cloud services is complicated and varies across vendors. Basic cost structure of a cloud service can be broken down into:
- Computing costs: The duration of running VMs per number of vCPUs, per GB of RAM
- Storage costs: Disks, files, and databases per GB
- Networking costs: internal and external, inbound and outbound traffic
Google's preemptible VMs (AWS Spot instances) are VMs that are built on leftover, unused capacity and priced three to four times lower than normal on-demand VMs. However, Compute Engine may terminate (preempt) these instances if it requires access to those resources for other tasks. Preemptible instances are adapted to batch processing jobs or workflows that can withstand sudden interruptions. They may also not always be available. In the next chapter, we learn how to launch preemptible instances from the command line.
Google cloud also recently introduced price reduction for committed use. You get a discount when you reserve instances for a long period of time, typically committing to a usage term of 1 year or 3 years.
The argument of cost cutting when moving to the cloud holds when your infrastructure is evolving quickly and requires scalability and rapid modifications. If your applications are very static with stable load, the cloud may not result in lower costs. In the end, as the cloud offers much more flexibility and opens the way to implementing new projects quickly, the overall cost is higher than with a fixed infrastructure. But this flexibility is the true benefit of cloud computing.
See https://cloud.google.com/compute/pricing for the current Google Compute Engine pricing.
The costs of cloud services have dwindled in the past several years. The three major public cloud actors have gone through successive phases of price reduction since 2012, when AWS drastically reduced its storage prices to undermine the competition. The four main cloud providers reduced their prices 22 times in 2012 and 26 times in 2013. Reductions ranged from 6% to 30% and touched all types of services: computing, storage, bandwidth, and databases. As of January 2014, Amazon had reduced the price of their offerings over 40 times. These reductions have been matched or exceeded by the other main cloud service providers. Recently, the three main actors have further reduced their prices on storage, possibly reigniting the price war. According to a recent study of cloud computing prices, there isn't much data suggesting that cloud is anywhere near a commodity yet. 451 research said so, further predicting that relational databases are likely to be the next price war battleground.