Customer Heterogeneity and Tariff Biases in Cloud Computing

In the last two years, mainly practitioners published newspapers and technical reports outlining the benefits and obstacles of Cloud Computing. Scientific research is limited to technical issues of Cloud Computing so far. Marketing and economic issues have been barely discussed in literature. Especially, customer considerations and pricing are only discussed vaguely in industry reports. A detailed understanding of the preferences enables providers to design efficient pricing models. Therefore, a survey was conducted to analyze the customer preferences for Cloud services. The results show heterogeneity in preferences and suggest the application of second degree price discrimination. Furthermore, the survey shows existence of flat rate and pay per use tariff bias for Cloud services. Thus, Cloud providers offer their services successfully with a flat rate tariff model, which contradict literature’s prediction of a dominance of flexible pay per use tariffs.