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Subscription-Based Pricing

Definition - What does Subscription-Based Pricing mean?

Subscription-based pricing is a common pricing strategy practiced by different kinds of IT vendors. It is now popular in the provision of cloud services, where vendors often deliver software capability over the Web.

Techopedia explains Subscription-Based Pricing

The idea of subscription-based pricing is that clients subscribe to a service over time. Typically, subscriptions will run from one month to another. This model is similar to the monthly billing cycles used by utilities and other kinds of vendor-provided services. In subscription-based pricing, the client typically has the ability to renew or cancel services every month.

In agreements between cloud computing providers and clients, subscription-based pricing competes with other pricing models such as consumption-based pricing, where clients pay for each unit of use, and market-based pricing, where prices are adjusted according to supply and demand, as well as other factors. Many of these pricing models will be evident in service-level agreements that help to define how cloud providers offer their services to clients. Experts expect cloud computing pricing models to get more complex over time, and recommend careful review of a service-level agreement before any final deal is made.

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