Per-Hour Price
Instances
$0.10
M1.small
M2.2xlarge
M3.xlarge
C1.medium
C3.large
$0.08
$0.06
$0.04
$0.02
$0.00
Oct-08
Oct-09
Oct-10
Oct-11
Oct-12
Oct-13
Oct-14
Oct-15
Figure 2: Price Reductions for Sample EC2 Instances
History of Cloud Pricing
All three big public cloud vendors (AWS, Microsoft and Google) have histori-
cally had different price models for renting virtual servers. Let’s quickly review
how they’ve changed over the years:
• Amazon started charging by the hour with a 1 hour minimum, and just
recently migrated to per-second billing (more on this later).
• Microsoft started with billing VMs by the hour, then moved to billing by
the minute and now bills by the second, but only for containers and
functions.
• Google used to charge by the minute with a 10 minute minimum, and
now charges by the second with a 1 minute minimum.
All public cloud vendors’ hourly rates vary from a few cents to a few dollars
depending on how powerful a server you rent.
On top of that, every vendor has a different approach to helping clients realize
additional cost savings if they rent virtual machines for a long time. Amazon
allows you to prepay for capacity by buying reserved instances. If you are going
to use a server consistently for a year or more, it makes sense to prepay upfront
and save a good chunk of money in the long term. Google’s approach is differ-
ent. They automatically give customers discounts based on how long the server
is in use. They call this feature a sustained use discount, and it’s a nice, auto-
matic way to get a cost break if the server is in use for awhile. Azure also started
offering reserved instances recently, but with the added twist that you can
cancel them if you want.
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