Skip to main content

Methods to calculate the charge model for an Azure (cloud) solution

Did you ask yourself how does a cloud provider change you? In this post we will take a look on 7 different charge methods.
There are multiple ways on how can charge the end clients when they are using your service, Things can become more complex when you need to calculate the running costs on top of which you add your own costs and cap.

There are 7 different ways for chargeback allocation that you can use inside your organization. From simple ones, that takes into account the number of users or a specific KPI, to more complex ones where IT cost together with stuff costs are putted together. The chargeback allocation methods are:

  • High Level Allocation (HLA)
  • Low Level Allocation (LLA)
  • Direct Cost (DC)
  • Measured Resource Usage (MRU)
  • Tiered Flat Rate (TFR)
  • Negotiated Flat Race (NFR)
  • Service based Pricing (SBB)

Let’s take each of them one by one and identify what are the chargeable metrics that are taken into account.


High Level Allocation
When using this method to calculate the charges, you need to take into account only a simple metric like size of department, number of employees or number of active users. For more complex system using only a size metric is not enough to be able to estimate the cost.
This charge method is common for communication platform where based on the number of users you can charge the consumer.

Low Level Allocation
This chargeable metric takes into account not only the headcount, but also the number of servers or cluster size. For example, this allows us to calculate the cost taking into account that for each 100 users we need two additional nodes into our cluster.
It’s a common mechanism used for CRM system, where the charge is done based on the number of users or clients combined with number of servers that are required on the background.

Direct Cost
Charges are calculated based on ownership-dedicated costs, which can be fixed of variable. Inside direct cost, we need to include not only the running costs of our solution, but also the cost of support team (including salary) and variable costs that can appear based on the number of our clients.

Measured Resource Cost 
This is a more complex way to calculate the cost. For this you need to take into account all resources that are consumed from Azure, like egress cost, bandwidth and storage cost for specific actions. Even if this method to calculate the cost is better than the previous ones it’s more complex. Taking into account all costs it’s hard because requires to know how many resources are consumed by each use case. Without knowing very well the NFR and the platform that it’s used by the solution it’s almost impossible to calculate the cost.
For example Azure Storage it’s a good example, where specific charge exist for each activity

  1. Store
  2. Transaction
  3. Egress

Tiered Flat Rate
Charge to the consumer is done without taking into account if he use or not that service. This model is common especially for services that are requiring resource reservations. Azure SQL Database it’s the best example, when you are charged the same amount of money if you use or not that service.

Negotiated Flat Rate
In this case the price is negotiated between the cloud provider and consumer. In this case the consumer is coming with their requirements and needs and the price is negotiated between two parties. The biggest advantage for the consumer is related to the price that is flat and does not change. In the same time, he does not have information related to consumption levels.
These charge method is common especially for virtual data center scenarios where charges are calculated per specific units with different tiers levels. Similar to the one that we have on different Azure services where we have Basic, Standard, and Premium.

Service Based Pricing
These charges are per specific measured unit of service. The level of transparity is much higher because consumer is paying for each resource he consumes. In the same time, it’s more complex to calculate the overall costs because are many variables and metrics can be different for each use case.

As we can see, deciding on what method we want to use for charge model it’s not an easy task. Take into account that even if you expose to the consumer a simple charge model like High Level Allocation, you will still need to calculate your Direct Costs and measure all the costs that are involved in running the platform. Don’t forget that beside fix and variable costs, you’ll have all the time direct and indirect costs.

Comments

Popular posts from this blog

ADO.NET provider with invariant name 'System.Data.SqlClient' could not be loaded

Today blog post will be started with the following error when running DB tests on the CI machine:
threw exception: System.InvalidOperationException: The Entity Framework provider type 'System.Data.Entity.SqlServer.SqlProviderServices, EntityFramework.SqlServer' registered in the application config file for the ADO.NET provider with invariant name 'System.Data.SqlClient' could not be loaded. Make sure that the assembly-qualified name is used and that the assembly is available to the running application. See http://go.microsoft.com/fwlink/?LinkId=260882 for more information. at System.Data.Entity.Infrastructure.DependencyResolution.ProviderServicesFactory.GetInstance(String providerTypeName, String providerInvariantName) This error happened only on the Continuous Integration machine. On the devs machines, everything has fine. The classic problem – on my machine it’s working. The CI has the following configuration:

TeamCity.NET 4.51EF 6.0.2VS2013
It seems that there …

How to check in AngularJS if a service was register or not

There are cases when you need to check in a service or a controller was register in AngularJS.
For example a valid use case is when you have the same implementation running on multiple application. In this case, you may want to intercept the HTTP provider and add a custom step there. This step don’t needs to run on all the application, only in the one where the service exist and register.
A solution for this case would be to have a flag in the configuration that specify this. In the core you would have an IF that would check the value of this flag.
Another solution is to check if a specific service was register in AngularJS or not. If the service was register that you would execute your own logic.
To check if a service was register or not in AngularJS container you need to call the ‘has’ method of ‘inhector’. It will return TRUE if the service was register.
if ($injector.has('httpInterceptorService')) { $httpProvider.interceptors.push('httpInterceptorService&#…

Fundamental Books of a Software Engineer (version 2018)

More then six years ago I wrote a blog post about fundamental books that any software engineer (developer) should read. Now it is an excellent time to update this list with new entries.

There are 5 different categories of books, that represent the recommended path. For example, you start with Coding books, after that, you read books about Programming, Design and so on.
There are some books about C++ that I recommend not because you shall know C++, only because the concepts that you can learn from it.

Coding

Writing solid codeCode completeProgramming Pearls, more programming pearls(recommended)[NEW] Introduction to Algorithms

Programming

Refactoring (M. Fowler)Pragmatic ProgrammerClean code[NEW] Software Engineering: A Practitioner's Approach[NEW] The Mythical Man-Month[NEW] The Art of Computer Programming

Design

Applying UML and Patterns (GRASP patterns)C++ coding standards (Sutter, Alexandrescu)The C++ programming language (Stroustrup, Part IV)Object-oriented programming (Peter Coad)P…