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A common definition for unit economics is direct revenues and costs, associated with a particular business model, that are specifically expressed on a per-unit basis. Metrics enable you to determine the revenue you’ll gain from a single unit of your business and the cost associated with servicing it, ultimately revealing the business value of spend. For a customer-facing application, that unit might be a user or customer subscription; for an ecommerce platform, it might be a transaction; and for an airline, it might be a seat.
By calculating cloud spend for total revenue, you can attach growth in cloud spending to your overall business growth. When these are in line, it makes sense that cloud spend isn’t wasted. When cloud spend is growing faster than the business, there may be cause for concern.
Measures of success are represented in the context of cloud costs and may include one or more key performance indicators ( KPI ), describe objectives with key results ( OKR ), and declare thresholds defining outliers or acceptable variance from forecasted trends.
at least one measure of success; should be described in a context of cost; this could be an efficiency KPI or an agreed upon threshold or target. for example:
- idle resource costs will not exceed 3% of total monthly cloud spend
- anomaly costs will not exceed $150/month
the information used that contributes to the measure(s) of success listed above; information here may include specific datasources, reports or any relevant input
Examining the nature of and the need for cloud unit costing with examples from cloud first organizations who’ve been pioneering this important discipline. Unit costing will become the standard by which FinOps practitioners obtain full business context for their cloud costs.Read more
Reference of cloud cost management platforms, tooling and service providers related to this Capability coming soon.
Reference of courses and training partners related to this Capability coming soon.
Get involved and contribute to the community by sharing your real world experiences related to this Capability in the form of a story or providing a playbook for how you have implemented best practices in your organization. Your real world experiences can be provided in the context of:
Join the conversation about this Capability in Slack . You can submit stories, how-tos and suggest improvements using one of the options for contributing here.