Client Risk Informedness in Brokered Cloud Services: An Experimental Pricing Study

Service brokerage in cloud computing markets aggregates cloud resources to lower the cost and risk of their services and to customize them to address different client needs. This research proposes a mechanism for pricing brokered cloud computing services that includes guaranteed computing job completion and risk-based pricing. Using a laboratory experiment with 42 participants playing the role of cloud computing clients, we compare the economic performance of the pricing mechanism under different levels of client risk informedness and job duration. The results suggest that such risk informedness plays a major role in influencing the willingness-to-pay of clients for brokered services. By investigating the heterogeneity of client risk propensity, we explain the performance differences and find an interaction effect for risk propensity and risk informedness on the willingness-to-pay of clients. Based on our findings and the related causal inferences, we discuss the implications for the pricing strategies of cloud services brokers, as well as for those of cloud services vendors.