A software development company is migrating its testing environments to Azure. These environments are only active for approximately 10 hours per week. The company chooses to utilize a consumption-based pricing model for the Azure Virtual Machines. Which of the following is a key financial characteristic of this model?
- The company is billed only for the specific duration that the virtual machines are running, classifying the cost as an Operational Expenditure (OpEx).Answer
- BThe costs associated with the virtual machines are classified as Capital Expenditure (CapEx) and must be depreciated over multiple years.
- CThe company is required to pay a fixed, upfront infrastructure fee before they can initialize or deploy any virtual machines.
- DThe company is billed a flat monthly rate that covers unlimited virtual machine usage, regardless of how many hours they are active.
Answer
The company is billed only for the specific duration that the virtual machines are running, classifying the cost as an Operational Expenditure (OpEx).
In a consumption-based model, there are no upfront infrastructure costs. Instead, users pay only for the resources they consume (in this case, the hours the virtual machines are active). These ongoing, usage-based fees are classified as Operational Expenditure (OpEx).
Step-by-Step Solution
Key Concept
Consumption-Based Model (CapEx vs OpEx)