Developing user perceived value based pricing models for cloud markets

Abstract

With the rapid deployment of cloud computing infrastructures, understanding the economics of cloud computing has become a pressing issue for cloud service providers. However, existing pricing models rarely consider the dynamic interactions between user requests and the cloud service provider. Thus, the law of supply and demand in marketing is not fully explored in these pricing models. In this paper, we propose a dynamic pricing model based on the concept of user perceived value that accurately captures the real supply and demand relationship in the cloud service market. Subsequently, a profit maximization scheme is designed based on the dynamic pricing model that optimizes profit of the cloud service provider without violating service-level agreement. Finally, a dynamic closed loop control scheme is developed to adjust the cloud service price and multiserver configurations according to the dynamics of the cloud computing environment such as fluctuating electricity and rental fees. Extensive simulations using the data extracted from real-world applications validate the effectiveness of the proposed user perceived value-based pricing model and the dynamic profit maximization scheme. Our algorithm can achieve up to 31.32 percent profit improvement compared to a state-of-the-art approach.