The consumption-based model and pay-as-you-go pricing compared with buying hardware

When you run your own datacenter, you buy servers, storage and network equipment before you can use them. You have to guess how much capacity you will need for the next several years. If you guess too low, applications slow down and you wait weeks for new hardware. If you guess too high, you have paid for machines that sit idle. You also pay for power, cooling, floor space, maintenance contracts and staff whether the machines are busy or not. This is the cost model the cloud was designed to replace.