In reply to Rob Steele.

Thanks Rob. To answer your question, there is a price breakeven point based on the utilization of the public cloud resources (pay per use) and beyond that point it makes sense to use dedicated private cloud resources. For most public cloud customers based on AWS usage pricing that threshold is 20% utilization (based on if the compute resources are used more than 20% of the time, measured over a month).

Based on the book, Cloudnomics, The Business Value of Cloud Computing, written by Joe Weinman, if there is a short enough period of peak demand for cloud services/applications, it makes sense to slice at least that peak demand period out of the total solution and use public on-demand pay-per-use resources to serve it rather than use only dedicated private cloud resources. On the other hand, if there is a long enough duration of non-zero demand, you may as well use dedicated private cloud resources to serve that baseline.