Profit Maximising Contract Plans for Cloud Computing Services
Providers of cloud computing services commonly offer contract plans (e.g., subscriptions) with different contract lengths as an alternative to single period plans. Contract plans are attractive for consumers who use the service periodically because the consumers benefit from significant price discounts if they commit themselves to the service provider for the time of the contract length. However, deciding on price discounts and contract lengths for contract plans is challenging, as binding consumers leads to greater profit, while offering greater price discounts negatively impacts the provider's profit. This paper is to outline the factors that drive the differences in profitability when offering a contract plan in addition to a single period plan.