CLOUD PRICING AND PACKAGING: THE ESSENTIALS CLOUD LEADERS

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1 CLOUD PRICING AND PACKAGING: THE ESSENTIALS CLOUD LEADERS Best practice for cloud service providers In association with

2 CONTENTS ABOUT INTRODUCTION Control Panels Templates/images Load balancers Automatic scaling & failover Firewalls Backups Sources & methodology

3 ABOUT Cloud Leaders Join the discussion! Cloud Leaders is designed to help web hosts, ISPs, telcos and other service providers build a successful public cloud business - and to help existing cloud service providers find new ways to accelerate their growth. Share your own best practices and get the full library of Cloud Leaders content: cloudleaders.net Together with leading commentators and analysts, we ve created a series of free articles and an online Cloud Leaders community to discuss and promote best practice in cloud service delivery. 03

4 INTRODUCTION This article looks at best practice in pricing and packaging for some of the essential features of an IaaS cloud, such as firewalls and backups, as well as features like automatic scaling and failover that raise a cloud service above traditional forms of hosting. Working with the team at Cloud Spectator, we ve conducted extensive research of the current state of the market to help you navigate the maze of pricing and packaging options. What s essential? We look at how effective the automation is. There s only so much we can do to manage DC costs and hardware & software costs. So the big thing for us is automation for provisioning computing resources, and for our customers to easily perform their tasks on their own - i.e. self service. We want to be there to provide service when they need it, but we don t want to provide service on repetitive administrative tasks. Richard Lingsch, eapps For each element of pricing and packaging you ll find guidance and recommendations from the Cloud Spectator team, with contributions from leading cloud providers based on their realworld experience running cloud businesses. 04

5 Control panels Cloud Spectator found that across all cloud providers surveyed, there were three different control panel options: cpanel, Plesk, and custom control panels. Pricing & packaging Sometimes cpanel or Plesk control panels are included with a VM for free, but more often, licensing costs apply. Custom control panels are free and included with a customer s virtual machine. Licensing costs for cpanel and Plesk, captured by Cloud Spectator, are given in the table below. Offering cpanel and Plesk can be advantageous for a provider with customers that are already comfortable with those control panels... However, as long as a provider s custom control panel is simple, interactive and intuitive, providers can offer only a custom control panel and be successful in this category. Cloud Spectator cpanel Plesk Price Range (Per Month) Average Price (Per Month) $ $15.00 $13.00 $ $18.50 $15.00 Control panels are very important, and a big challenge for customers. They have grown so much in power and sophistication that they re daunting for customers to sort out. Richard Lingsch, eapps Example: Rackspace 05

6 Templates / Images Almost all providers offer a library of operating system templates that can be easily and quickly uploaded. Cloud Spectator found, however, that many smaller providers offer open source application stacks that have various capabilities in areas like web design, front office, back office, database, and programming languages and frameworks. For example, a web developer could benefit from an image stack that includes an application like Wordpress; a customer needing a database platform can use a pre-configured template to deploy MySQL quickly and easily. Pricing & packaging Most services include VM templates. Some template libraries require a separate purchase (around $5 for access to the library) but this is quite rare. Offering a unique and robust library of templates can serve as a significant differentiation point. This should be offered for free. Once again, providers must know their market and match different image stacks with what the demand is. If you re looking to service a large amount of websites, provide web development templates. If you re going after the development market, have a strong presence of templates with different programming languages and frameworks. Database platforms are extremely popular in most markets. Making the customer s life as easy as possible is the goal; offering a diverse and robust library of preconfigured images can serve as a differentiator and help distinguish a service from other, more commoditized services. Cloud Spectator For some clients it s as much about the perceived benefit of templates as it is about actually using them. For those customers that need them, though, it s vital that we can address that need for instant SaaS based on our cloud. Stein van Stichel, Shift to the Cloud Templates are huge. Every client has their own preference and requirements. Giving them a wide range of options gives them the opportunity to build up their own templates/paas/saas solutions. Clint Chapman, Ubiquity Servers 06 cloud leaders

7 Load Balancers (unmanaged) Most providers offer software load balancers, though some require that the customer bring and set up their own. Pricing structures for those that provide load balancers vary quite a bit. Some services include as many as you need, at no extra charge, while others charge the customer a set price per load balancer. Another option is having the customer pay for a small virtual machine that handles load balancing for their other virtual machines. The providers that use this structure provide the load balancing software to the customer. Pricing & packaging Cloud Spectator found that most services include load balancers for free. Some providers do charge, however, for options like SSL encryption: for example, a Rackspace load balancer with SSL encryption is $36.50/month. In addition to a fee per load balancer, Rackspace also charges $10.95 per month for each 100 concurrent connections. For load balancers that are not included for free, and are based on a flat fee, Cloud Spectator found a wide range of prices presented in the table below. Because of Rackspace s variable pricing, their prices are not included in this data. A scarily high percentage of customers assume that because it s the cloud, they already have load balancing and scaling. They are often shocked when they hit the wall or have an outage. The smaller the customer the more likely this is to be the case. It s a real challenge with small and medium-sized customers that have sudden success on their site, and a real education process to get them to understand that they need to move up a big step in sophistication. Richard Lingsch, eapps Packaging and pricing for load balancers is difficult. On one hand, you would like to charge for load balancers to go with the pay-for-what-you-use philosophy of IaaS, but on the other hand, you want to keep things simple. If many of your customers use load balancers, then it makes sense to offer them for free with any VM; if a lot of your customers do not need a load balancer and only have one VM, then charging for a load balancer makes sense. Any provider with a focus on larger websites and ecommerce end-users should include load balancers. However, if you re servicing many customers with only one VM, then it makes sense to charge a flat fee. Cloud Spectator Price Range (Per Month) Average Price (Per Month) Per load balancer $ $ $

8 Automatic scaling & failover While these features are essential to the always on/ instant scalability that customers expect from the cloud, Cloud Spectator found that they are not offered as standard by most providers. Where they are offered, they are usually included free of charge. Autoscaling Autoscaling makes the customer s life easier by not having to proactively monitor traffic and scale manually when load increases. While many of the biggest players in the market do not currently offer this feature, Cloud Spectator found that Autoscaling is included at no extra cost for the services that have it. There s no question that autoscaling is a valuable cloud feature. Since many customers don t know what it is, autoscaling can serve as a differentiator until the market develops and it becomes standard, as more customers ask for it. Automatic failover Failover and redundant architectures are significant advantages of the cloud, but automatic failover is not particularly common. Most services, including a vast majority of the biggest cloud infrastructure providers, leave it up to the user to provide software and set up their environment in a way that enables failover. Again, automatic failover can serve as another differentiation point for cloud providers. Failover is key. Forget any confusion about what the cloud is and does: clients need to know it s working for them even if hardware fails. And far too often, clients run out of memory. Being able to give them more on the fly, and show them that it will solve their issue, helps the sales process greatly. Clint Chapman, Ubiquity Servers To keep things simple for customers, we don t enable autoscaling by default, but when we do, we don t charge for the feature it s just part of your cloud service. Stein van Stichel, Shift to the Cloud 08

9 Reboot-free scaling Another useful feature that has the ability to serve as an important differentiator. With reboot-free scaling, a customer s CPU and RAM can be resized without having to restart their virtual machine. This is especially important for e-commerce companies and other webfacing applications, because if there s one time they don t need to be taken offline, it s when they have such high traffic that they need to scale up their resources. Live scaling is extremely attractive for web-facing applications, and could put you ahead of the competition in the eyes of certain customers. Pricing & packaging Where available, all of these features are included for free. If other variables permit, try to include these features as they are all very valuable. Customers, especially ecommerce companies and others running mission-critical applications, looking for high availability, will love the reboot free scaling and auto failover features... all of these features should be included with the service at no charge. Cloud Spectator 09

10 Firewalls (unmanaged) Unmanaged firewalls are generally standard in the industry, but there are different types of firewalls that either the user can set up, or that are already set up by the provider, using rules that the provider defines. Some cloud providers set up network and hypervisor firewalls as part of their service. Some offer further firewall technology at the hypervisor level for additional anti-spoofing and anti-sniffing protection. This largely depends on the cloud platform they use. Some services allow users to define their own firewall rules for their virtual machines. These customizable software firewalls can be configured by the user for each virtual machine to provide a high level of customized security. Pricing & packaging Services offering user-defined, unmanaged software firewalls almost always include them for free. Software firewalls are great for most cases. In a less technical audience, installing a firewall at the network or hypervisor level saves them the headache of figuring out how to configure an effective one themselves. For an enterprise audience or a more technical one, firewalls offered should be 100% customizable at the VM level. Software firewalls should be free and included in the cost of the virtual machine. Cloud Spectator The firewall is the large piece of the puzzle. Our clients love being able to block traffic from getting to their cloud instances. Backups are a great safety net for both us and our clients, too. With auto backups turned on by default, we can help customers restore at anytime. Clint Chapman, Ubiquity Servers 10

11 BACKUPS [UNMANAGED] Many smaller providers offer the ability to backup VMs in one form or another. Cloud Spectator found that most self-managed backups are offered for free. Some providers charge for storage space and some charge a flat fee. The larger providers usually offer managed backups only. Backups, and the ability to spin up virtual servers from a backup, are important in all markets. Pricing & packaging In many cases a certain amount of backup storage space (around 20 or 30GB) is included with a VM. Providers that charge for backups either offer a low flat rate (around $5) or charge for the storage space to store those backups. Cloud Spectator found a range of backup prices, shown in the table as price per GB. Although some providers charge for the backup space on an hourly basis, for standardization purposes the figures in the table have been converted to monthly. Backups are also another service that too many customers think they already have. Even if they pay for it they often don t use it properly and are exposed. We put a lot of attention into this area, because more demanding customers, in particular, need better backup administration. Richard Lingsch, eapps Per GB Price Range (Per Month) Average Price (Per Month) $ $0.18 $

12 Sources & METHODOLOGY OnApp is a leading provider of cloud management, CDN and storage software for service providers. For more information: cloudleaders.net cloudleaders@onapp.com Cloud Spectator ( is a cloud computing consultancy based in Boston, MA. The Cloud Spectator team provides research, analysis and advisory services for Infrastructure-as-a-Service cloud providers, technology companies and customers. For this article Cloud Spectator researched 36 service providers in the U.S., Europe and Asia-Pacific, ranging from small regional and national companies to very large global cloud providers. This cross-section was chosen to reflect a range of pricing and packaging approaches, and split approximately 50/50 between companies using OnApp software, and companies using other platforms. All resulting data used in this article was accurate as of 2nd November OnApp Limited. All rights reserved.