A Performance-Based Scheme for Pricing Resources in the Cloud

TL;DR

This paper proposes a new pricing scheme for cloud resources that minimizes customer risk, ensures fair provider revenue, and incentivizes truthful revenue reporting, with efficient algorithms for implementation.

Contribution

It introduces a risk-minimizing, incentive-compatible pricing mechanism that correlates customer revenue with resource prices and enforces linear pricing constraints.

Findings

The mechanism is incentive compatible, encouraging truthful revenue reporting.

Linear pricing reduces resource payment distortions.

Algorithms for the proposed schemes are computationally efficient.

Abstract

With the rapid growth of the cloud computing marketplace, the issue of pricing resources in the cloud has been the subject of much study in recent years. In this paper, we identify and study a new issue: how to price resources in the cloud so that the customer's risk is minimized, while at the same time ensuring that the provider accrues his fair share. We do this by correlating the revenue stream of the customer to the prices charged by the provider. We show that our mechanism is incentive compatible in that it is in the best interest of the customer to provide his true revenue as a function of the resources rented. We next add another restriction to the price function, i.e., that it be linear. This removes the distortion that creeps in when the customer has to pay more money for less resources. Our algorithms for both the schemes mentioned above are efficient.