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Acquisition Pricing


Because cloud is built around services, not products, it can be difficult to to do an one-to-one comparison of vendors. Cloud Service Providers (CSPs) offer different functionality, are backed up by different infrastructure configurations, and offer services in different billing units. The more customizable your cloud solution, the more complicated these calculations are likely to be — Software as a Service (SaaS) solutions are typically sold via individual fixed-price licenses, Infrastructure as a Service (IaaS) solutions are typically metered, and Platform as a Service (PaaS) solutions can be either (and sometimes both).

While cloud solution pricing structures are different from other products or services you may have worked with before, there are ways to make these differences work on your behalf. Here are a few things to keep in mind as you consider your investment in cloud.

Government pricing is different from public pricing

As a rule, government prices must be less than or equal to the lowest commercial price. You can use commercial and publicly available pricing information as a baseline to support your initial government costs estimates. Through to steps of conducting market research and reviewing government prices paid data you will be able to refine your government cost estimate. When selecting your vendor it is important to conduct a review of the vendors pricing with the vendor to ensure complete understanding of your projected costs. This becomes particularly relevant when you start working with Cloud Service Providers (CSPs) resellers and brokers, who may have negotiated their own special pricing with CSPs.

Don’t expect costs to be locked-in

Just as items in stores go on sale, the price of cloud services fluctuates over time. This is a good thing; a competitive field of CSPs and increasingly optimized technology will typically lead to lower prices for you and your team.

Do the math when you can. Keep an eye on the units of measurement vendors use

You may not be able to make a perfect one-to-one comparison, but if one Cloud Service Provider (CSP) charges per hour and another per minute, multiplying or dividing by 60 can help you bring both prices in line with each other. For metered services, you may have to structure your procurement to include Not To Exceed (NTE) ceiling values, the maximum costs a vendor can incur, on a particular service or a group of bundled services. For Firm Fixed Price (FFP), you will need to estimate the number of units (e.g. users) you will need for a specified Period of Performance (POP). Your procurement may also need a combination of NTE and FFP.

Think about the services that meet your needs

In addition to overall costs, pay special attention to pricing for the services you’re likely to need and use the most and how much flexibility there is to procure additional services if needed. For instance, a CSP with low transaction prices and high storage prices may not be a good fit for an agency planning to store a significant amount of data.

Think about Cloud Professional Services

Cloud is a technology, but don't forget to include your human needs and to estimate your costs for Cloud Professional Services (CPS). CPS includes services for technical and project management assistance with your transition to the cloud, post transition and execution support to optimize your cloud to minimize your costs and to maximize your performance, and cloud training for your IT staff.