IBM embraces ‘pay as you go’ cloud pricing

The overhaul means businesses can benefit from more flexibility when striking agreements

IBM has ditched subscription-based cloud pricing in favour of a 'pay as you go' scheme as it continues to transform its central focus to cloud provision.

With the Cloud Pay as you Go with Committed Use model, customers will need to negotiate a certain amount of cloud usage they’d be committing to pay for month after month, as well as discounted pricing. 

IBM's main selling point for its new cloud pricing model is that customers won't be met with penalties for using more than is expected. Instead, customers will be charged at the normal discounted rate they’ve negotiated for their expected cloud usage.

"With this billing model, you commit to spend a certain amount on IBM Cloud and you also receive discounts across the Cloud platform,” said Amit Patel, offering management, direct sales and Haley Lucey, IBM cloud content experience.

"You are billed monthly based on your usage, and unlike a subscription, you continue to receive a discount even after you reach your yearly committed amount."

The change comes after another mixed round of financial results for the computing giant, with a 10% surge in cloud growth overshadowed by the sharpest overall revenue decline in five years. 

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IBM's cloud business earned $7.5 billion during Q4, with revenue from Red Hat also increasing by 19%. However, this wasn't enough to raise overall revenues, which dropped 6% between October and December. 

The pivot to pay as you go pricing is also part of a wider shift in pricing strategy, with IBM also announcing last week that it’s raised the prices of its Enterprise Plan for Db2 on Cloud programme from January 2021. 

The console user experience is also getting an overhaul, IBM says, with changes including visualisation of progress towards a cloud commitment, with ways to identify any discount, spending progress and remaining time on a commitment. 

Customers can also look at their spending break down, month by month, as well as a detailed usage dashboard for each specific calendar month.

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