In this chapter, we are going to learn how to frame and communicate the inherent cost advantages of cloud platforms. You will finish this chapter with a firm understanding of the cloud pricing models available today and how to optimize them. These models are viewed differently by businesses, so we will cover which aspects of the model are appealing to certain business leaders.

Once we have a firm understanding of the pricing model, we'll dive into building economic business cases for adopting cloud. We'll demonstrate this through several examples to show you the inherent cost benefits and flexibility that cloud can afford. Finally, we'll cover common toolsets and services available to ensure that we are monitoring, controlling, and optimizing costs in a cloud native way.

Before we begin, let's define cost as the expense that a business incurs in bringing a product or service to the market. Price is defined as the amount an entity (consumer or business) pays for a product or service. Finally, opportunity cost is defined as the benefit that an entity (consumer or business) could have received, but gave up, to take another course of action. Stated differently, an opportunity cost represents an alternative that's given when a decision is made.