Cloud Computing
Pay-As-You-Go
Definition
Pay-as-you-go is a cloud computing payment model in which a customer is billed for the resources they actually use. There are no long-term contracts or upfront commitments.
Why It Matters
This model aligns costs directly with usage, which is a fundamental shift from the traditional IT model of purchasing hardware for peak capacity. It enables cost efficiency and allows businesses to scale their expenses up or down along with their needs.
Contextual Example
A serverless function (like AWS Lambda) is a perfect example of pay-as-you-go. You are billed for the number of requests and the duration (in milliseconds) that your code runs, and you pay nothing when it's idle.
Common Misunderstandings
- Pay-as-you-go is synonymous with the on-demand pricing model.
- While flexible, this model can lead to unexpected costs if usage is not monitored and controlled.