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Will Amazon's Pricing Model Radically Change SaaS Based Pricing Moving Forward?

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Reading Andre Yee's recent blog about the dynamic pricing model for Amazon's EC2 Spot Instances, which Amazon describes as: Spot Instances are a new way to purchase and consume Amazon EC2 Instances. They allow customers to bid on unused Amazon EC2 capacity and run those instances for as long as their bid exceeds the current Spot Price. 

So, as Andre asks:  Is this only for IaaS and PaaS or will SaaS based pricing radically change moving forward? 

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  • Dynamic pricing is a opportunity for SaaS players to utilize the cost spread of resources to their advantage and optimize their margins. This cost advantage should be passed to customers only for specific areas or workloads where the SaaS player is offering lesser incremental value. Example is a testing environment as a service or a batch processing load can be priced cheaper at times. However for complex applications the customers need not have visibility into the spot pricing market on the infrastructure (analogy is does the electricity bill for consumer need to vary if the utility provider had a hard time negotiating spot prices, answer is no and it should not vary either).

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