Google Opens Up App Engine Pricing Model

billing-blog-post-100percent-trimUntil now, Google’s (s goog) App Engine has been a great playground for coders: Everyone gets a daily quota of computing resources to play with. But without understanding how pricing will work when you go beyond those quotas, it’s been harder to understand business models built on it. Today, however, Google has shown us how the pricing model will work.

The approach is similar to AdWords: You set a daily budget, and when your application exceeds its free quota for that day, additional capacity comes out of the budget. The cost is split across processing, storage and bandwidth.

It’s easy for Google to offer a free daily quota because App Engine isn’t built around virtual machines the way competitors like Amazon’s (s amzn) EC2 are: You’re not paying by machine, because there aren’t any machines. Competition from Google’s free quota model may encourage other clouds such as Amazon to introduce free cloud computing quotas for small-traffic applications; meanwhile, Google is carefully launching an ecosystem for developers to build and sell their cloud-based software.