AWS is a little bit a hybrid of both. If you're paying hour-to-hour, all cuts are immediate. But there is such a huge discount for reserved instances, that many large clients are using a large proportion of them. With a 3-year "heavy utilization" reserved instance, Amazon has gotten a significant % of the total price for running that instance up front, locked in for 3 years. Since the biggest part of the revenue (the reservation fee) is locked in, cutting the hourly rate only gives back a smallish part of the revenue to those kinds of clients.
Really? when they lower the price of the per-hour billing they don't lower the locked-in fees?
Huh. In the VPS market, from what I've seen, the rule is "treat your existing customers as well as your new customers"
while, say, the co-location market is like the real-estate market. "Subsidize your new customers, and if they are still alive when the lease is up, take profits in the form of much higher renewal rent."
I guess what you describe with pre-pays is sort of inbetween. There's a difference in most minds, I think, between raising a price and just not lowering it when you perhaps could be expected to. Most people new to the real-estate market feel pretty bent out of shape when they find out that they have to pay significantly more in rent to renew their existing contract than they will pay if they move.
