pay-as-you-go cloud computing (PAYG cloud computing)

This definition is part of our Essential Guide: Optimize your public cloud cost management strategy
Contributor(s): Erin Sullivan

Pay-as-you-go cloud computing (PAYG cloud computing) is a payment method for cloud computing that charges based on usage. The practice is similar to that of utility bills, using only resources that are needed.

One major benefit of the pay-as-you-go method is that there are no wasted resources, since users only pay for services procured, rather than provisioning for a certain amount of resources that may or may not be used. With traditional enterprise design, users architect data storage to handle the maximum workload. But with the public cloud, the pay-as-you-go method allows you to be charged only for what you store.

Pay-as-you-go platforms, such as Amazon EC2, provide services by allowing users to design compute resources and charges by what is used. Users select the CPU, memory, storage, operating system, security, networking capacity and access controls, and any additional software needed to run their environment.

There are three main categories of cloud computing services, and each one can use a different form of the pay-as-you-go model.


This was last updated in March 2015

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