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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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In today's increasingly complex cloud landscape, organizations are no longer limiting themselves to a single cloud provider. Instead, they're embracing multi-cloud strategies to leverage the best capabilities from various providers, ensure business continuity, and avoid vendor lock-in. However, with this shift comes a significant challenge: how do you effectively price a multi-cloud development platform that spans different providers with varying cost structures?
The Multi-Cloud Pricing Dilemma
Multi-cloud pricing presents unique complexities that single-cloud environments don't face. When your development platform spans AWS, Azure, Google Cloud, and perhaps even private cloud infrastructure, traditional pricing models often break down for several reasons:
- Each cloud provider has different pricing units and structures
- Resource costs vary significantly between providers
- Network transfer between clouds incurs additional expenses
- Management overhead increases with each added provider
According to Gartner, by 2025, over 90% of enterprises will pursue a multi-cloud infrastructure strategy, making the need for coherent pricing strategies more critical than ever.
Common Multi-Cloud Pricing Models
1. Consumption-Based Pricing
This pay-as-you-go model charges customers based on their actual usage across all cloud environments. While seemingly straightforward, it requires sophisticated metering capabilities to track usage across disparate cloud platforms.
Pros:
- Directly ties costs to actual usage
- Appeals to customers with variable workloads
- Provides flexibility as needs change
Cons:
- Can be unpredictable for customers
- Requires complex usage tracking across clouds
- May discourage platform exploration
2. Tiered Subscription Model
This approach offers different service levels with varying capabilities, often with a fixed monthly or annual fee regardless of which underlying cloud infrastructure is used.
Pros:
- Provides cost predictability for customers
- Simplifies the billing process
- Creates clear upsell pathways
Cons:
- May not align with actual resource consumption
- Can lead to over-provisioning or under-utilization
- Difficult to account for dramatic differences in provider costs
3. Hybrid Pricing Models
Many successful multi-cloud platform providers are implementing hybrid approaches that combine elements of subscription and consumption pricing.
According to a 2023 Flexera State of the Cloud Report, 84% of enterprises now have a multi-cloud strategy, with organizations using an average of 2.6 public clouds and 2.7 private clouds.
Best Practices for Multi-Cloud Platform Pricing
Prioritize Cloud Portability
Any pricing model must account for the value of cloud portability—the ability to move workloads between different cloud providers with minimal friction. This capability represents significant value to customers and should be reflected in your pricing structure.
"Cloud portability is becoming a critical feature, not just a nice-to-have," notes Forrester analyst Lauren Nelson. "Organizations are increasingly looking to avoid vendor lock-in and maintain flexibility to capitalize on pricing advantages or unique capabilities across providers."
Offer Transparency Across Environments
Customers need visibility into how their costs break down across different cloud environments. Providing dashboards and analytics that clearly show spending by cloud provider, service type, and application can be a powerful differentiator.
Consider Value-Based Components
Rather than focusing solely on resource consumption, incorporate the value your platform provides into your pricing. This might include:
- Time savings through automated multi-cloud deployment
- Cost optimization through intelligent workload placement
- Risk reduction through improved governance across clouds
- Simplified compliance across diverse cloud environments
Test a Blended Rate Approach
One effective strategy is to offer blended rates that normalize the cost differences between cloud providers. Instead of passing through the exact costs from each provider, you establish standardized rates for compute, storage, and network resources regardless of the underlying provider.
Real-World Examples of Multi-Cloud Pricing Success
Case Study: Platform9
Platform9 offers a managed Kubernetes platform that works across public clouds and on-premises environments. Their pricing model combines a base subscription fee with additional charges based on the number of cluster nodes, regardless of where those nodes are hosted.
This approach provides customers with predictability while still scaling with their usage. It also encourages users to distribute workloads optimally rather than making decisions based on provider-specific pricing anomalies.
Case Study: HashiCorp
HashiCorp takes a different approach with their Terraform Cloud product, which helps organizations manage infrastructure across multiple cloud providers. They offer a freemium model with tiered pricing based on features and the number of users, rather than charging based on the infrastructure being managed.
This model recognizes that the value lies in the coordination and governance capabilities, not just the underlying resource consumption.
Pricing Strategies for Different Customer Segments
Enterprise Customers
For enterprise customers managing substantial multi-cloud environments, consider offering:
- Custom enterprise agreements
- Volume discounts based on total cloud spend
- Professional services packages for cloud optimization
- Reserved capacity options across providers
Small to Medium Businesses
SMBs typically need more predictability and simplicity:
- All-inclusive bundles with reasonable usage limits
- Simplified blended rates
- Self-service options with transparent pricing
- Starter packages focused on hybrid cloud scenarios
Future-Proofing Your Multi-Cloud Pricing Strategy
The multi-cloud landscape continues to evolve rapidly. To future-proof your pricing strategy:
- Build flexibility into your contracts to accommodate new cloud providers
- Create mechanisms to adjust for significant provider price changes
- Include provisions for emerging technologies like edge computing
- Consider how serverless and container technologies impact traditional resource-based pricing
Conclusion: Finding Your Optimal Multi-Cloud Pricing Model
There's no one-size-fits-all approach to multi-cloud platform pricing. The best strategy depends on your specific platform capabilities, target customers, and competitive landscape. However, successful pricing models typically share these characteristics:
- They abstract away the complexity of different provider pricing schemes
- They provide predictability while still reflecting actual usage
- They account for the added value of multi-cloud management and portability
- They offer transparency into costs across environments
By focusing on the value your platform provides in simplifying the multi-cloud experience, rather than just passing through underlying costs, you can develop a pricing strategy that both attracts customers and builds a sustainable business.
As the multi-cloud trend accelerates, organizations that master these pricing challenges will be well-positioned to capture market share in this rapidly growing segment of the cloud ecosystem.