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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.
- Infrastructure as a service: Customers pay on a per-use basis, typically by the hour, week or month. Some cloud providers also charge based on the amount of virtual machine (VM) space used. This model does not require users to deploy in-house hardware and software. IaaS vendors include IBM, Hewlett-Packard, Microsoft and Amazon Web Services.
- Platform as a service (PaaS): Can be priced per application/user or gigabyte of memory consumed per hour. Microsoft has come out with a per-minute pricing model for its PaaS that stops the meter when you stop a VM, while preserving the VM state and configuration. PaaS vendors include Google, Oracle Public Cloud and Windows Azure.
- Software as a service: Pricing can be based on features, storage capacity or on a per-user basis. Vendors include Salesforce.com, NetSuite and Microsoft Dynamics.