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Cloud Computing · Foundational

Economies of Scale

Cost advantage cloud providers gain from enormous purchasing and operating scale, passed to customers as lower prices.

Definition

Because providers aggregate usage from hundreds of thousands of customers, they achieve lower per-unit costs for hardware, power and operations than any single organization could. This is one of the six advantages of cloud computing described by AWS.

Example

A provider's price per GB of object storage drops over time as its aggregate capacity grows.

Exam tip

Recall the AWS six advantages: trade fixed expense for variable expense, benefit from massive economies of scale, stop guessing capacity, increase speed and agility, stop spending money on data centers, and go global in minutes.

Related terms