How to calculate prices of my service based on Amazon Ec2 prices?

I'm going to provide some service for media content management. I will use Ec2 instances for service hosting. So, what are reasonable margins to Ec2 prices? What guides exist for such a matter? I want to avoid a situation when somebody will borrow my idea and cut me off simply by lower prices. Let's think for simplicity that competitor will also use Ec2.
Even rough estimations such as 10%, 40%, 200% would be fine.

Prices Service Cloud

asked Aug 9 '11 at 04:56

Alehro
113 points

3 Answers

Mnn, respectfully, I think you're looking at this from the wrong perspective. Don't price based on what your manufacturing cost is; price on what the value is for your end customer.

So the fact that you're hosted on EC2 is immaterial to your pricing. You can, if you want to, explain this in an FAQ somewhere, only to provide some reassurance that you're professionally hosted and scalable.

The question is what pain does your "service for media content management" solve, and what is the solution worth to your customers.

answered Aug 9 '11 at 07:58

Jesper Mortensen
15,292 points

Theoretically you are right. But practically it is much simpler for me to estimate customers' pain through the experiments with prices rather than estimate prices through the pain. Moreover, I have no idea how to estimate the value of my service for customers. So, I'm going to experiment with prices. – Alehro 12 years ago

This may be what you're looking for..

Here's the EC2 calculator

http://calculator.s3.amazonaws.com/calc5.html

answered Aug 9 '11 at 06:36

Kirk Strobeck
80 points

Here is a document I happened up recently that makes it pretty easy to compare pricing between a range of other service providers. Maybe relevant/useful:

Pricing Pages Otherwise, I agree with Jesper, it's about the value to your customer, not the margin on your cost.

answered Aug 9 '11 at 14:19

Justin Hammack
151 points

Thanks, your link is very informative. – Alehro 12 years ago