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Understand Your Effective Cloud Costs with Markups and Markdowns

Understand Your Effective Cloud Costs with Markups and Markdowns

When calculating cloud costs, organizations often need to account for overhead costs (such as internal personnel costs, software license costs, and certification costs) that are not included on a cloud bill. In addition, users of public clouds may have additional negotiated discounts that are applied to the list price. For a true picture of your cloud costs, you need to consider all of these factors. This becomes particularly important when you want to achieve complete and accurate showback or chargeback across your enterprise.

RightScale Cloud Analytics, a solution for visualizing, forecasting, and optimizing costs across all your clouds and virtualized environments, provides a Markup and Markdown feature that allows you to apply these overhead costs or discounts on top of your cloud infrastructure costs. This feature is designed to enable you to:

1. Add overhead costs for showback and chargeback

When dealing with cloud computing, your organization will have shared costs such as personnel, training, certification, and licensing. These costs can be included in your showback and chargeback reports. A common way that many enterprises do this is by adding a percentage to the cloud infrastructure costs that have been accrued. This way, they ensure that no matter how small or large the cloud usage is across their business units, these costs are shared fairly.

2.  Discount infrastructure costs to entice business units to use central IT clouds

We work with many central IT departments who want to enable their internal developers and cloud users to be agile, launching and terminating their own infrastructure as they need it. However, central IT is concerned about governance and wants to encourage business units and teams to go through a centralized cloud management portal to access the cloud. One way to reduce shadow cloud spend is to entice them to use the central IT resources by providing a discount on the cost of cloud. This can be achieved by applying a percentage markdown to your costs.

3.  Apply negotiated discounts when analyzing cloud costs

Many companies have special discount rates with cloud providers. These enterprises want their internal cloud users to see the effective cloud cost with the discount applied so that they can make better decisions about the best cloud option. This can be achieved by applying a percentage markdown to a particular cloud or cloud account.

Watch this short demo of how to use markups and markdowns and how they will get applied:

If you already have a RightScale account, you have access to RightScale Cloud Analytics and the Markup and Markdown feature via your accounts page. To try Cloud Analytics, sign up for a free trial.

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