Optimal Pricing for Serverless Computing

Serverless computing is an attractive cloud services paradigm, simultaneously promising reduced cost and greater flexibility for customers and increased revenues and higher resource utilization for cloud providers. In this paper, we present an analysis of the potential cost benefits of serverless computing for end customers and cloud providers. Using realistic cost models, queueing theoretic performance models, and a game theoretic formulation, we explore the tradeoffs between serverless computing (SC) and traditional cloud computing (virtual machine, VM). In the proposed framework, customers distribute their workload between SC and VM to minimize their cost while maintaining a particular performance constraint, while the cloud provider sets SC and VM prices to maximize its profit. We explore the impact of relative prices, customer workload, service capacity, and provider costs. Our main result is the identification and characterization of three optimal operational regimes for both customers and the provider that leverage either SC or VM only, or both, in a hybrid configuration. The various insights provided in this paper can help both cloud providers and customers better understand the tradeoffs and implications of a hybrid system that combines serverless and VM rental with corresponding pricing models.