Friday, January 21, 2011

How to Make Money on SpotCloud (Provider Pricing Guide)

One of the first questions SpotCloud providers ask me after they've setup their infrastructure and made their capacity available on SpotCloud is how to effectively price their capacity. There really is no easy answer, there are a lot of factors that dictate SpotCloud capacity pricing.

For example competition from a particular geography can lead to a higher or lower price. (Basic supply and demand) What I have noticed is that providers from specific regional hot spots such as Brazil, Russia and Asia tend to be able to price higher than places like San Francisco which tend to be more capacity saturated. Another question is what should the price be based on. My answer is typically it should be a combination of your fixed costs and a markup. It's also better to base it on the element that is the hardest (costliest) to share and delegate which in our case is typically RAM or potentially bandwidth. Also before you can hope to define a price you need to be able to understand what your own costs are on a monthly basis, utilization is also a key component.

To help with the SpotCloud pricing process, we've created a simple SpotCloud Provider Pricing Guide in the form of an Excel spreadsheet on Google Docs or Download the Excel Spreadsheet directly. (Feedback is greatly appreciated)

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