[qubex]

Variabilising all a company’s costs is every CFO’s dream: it makes all projections perfectly linear and totally eliminates any risk as zero revenue doesn’t create a loss because all costs also go to zero.

At least, in the start-up phase of operations.

Later, when economies of scale kick in and break-even has been far overcome, one seeks to negotiate smaller unit charges, primarily to capture more of the added value for oneself, and partially to reduce visibility of one’s revenue.

[ocdtrekkie]

That's all definitely true. I think the cloud is a terrible value proposition for anything that's not a startup, for instance: You will safe a crud-ton of money paying your own IT staff instead of paying Amazon's IT staff, provided you have a stable business with relatively predictable needs.

Arguably, once you are a big player in a space, you should ideally have the clout to negotiate a better deal too.