How Price Sensitive are Public Cloud Consumers?

If you listen to cloud computing providers you would think that everyone considering cloud computing is focused on price.  Indeed, the prices of public cloud computing services have dropped significantly in the last several years as cloud providers attempt to capture a larger share of a market that is exploding.

I work with those who purchase cloud computing services.  I find that price is important, but typically very low on the list as the deciding factor when selecting public cloud providers.  This surprises many and is due to a few key reasons:

  • First, most understand that lower cost solutions that don’t provide the required features actually cost more in the long run.  Thus, they are likely to select the leader versus the lower cost public cloud.
  • Second, when considering budgets, they are becoming more oriented to on-demand types of services than capital expenditures.  Thus, it’s easier to sign up for $50K per moth rather than $3M for hardware and software.
  • Finally, price has its attraction.  People find that a $50 bottle of wine tastes better than a $10 bottle of wine, when it’s the same damn wine.  Many believe that price defines value and, in most cases, they will pay more for the perception of value.