The allocation of computer resources—is pricing the answer?

ABSTRACT

The widespread use of complex third generation computing systems has led to a much broader concern about the means by which the resources of these systems are allocated among the user community. One means that is suggested more and more frequently is a pricing procedure. In this paper the manner in which one would like to allocate computing resources is considered, and then the extent to which a pricing mechanism fits this mold is discussed. Inasmuch as pricing must serve as a rationing mechanism at times, consideration is given to the means by which prices can be adjusted flexibly in order to make a dynamic allocation of resources. Consideration is also given to the means by which users can be insulated from the harmful effects of frequent price fluctuations. Although the subject of pricing has been given a lot of attention recently, a number of misconceptions persist about its purpose and its operation. An attempt is made to clarify some of these misunderstandings and to highlight the advantages and disadvantages of pricing. Two illustrative pricing systems are also discussed in order to demonstrate the applicability of pricing in quite different environments.

REFERENCES

• 1: GREENBERGER, M. The priority problem and computer timesharing. Man. Sci. 1P, 11 (July 1966), 888-906.
• 2: SMIDT, S. Flexible pricing of computer services. Man. Sci. 15, 10 (June 1968), B-581-B-600.
• 3: KANTER, H., MOORE, A., AND SINGER, N. The allocation of computer time by university computer centers. J. Business 41, 3 (July 1968), 375-384.
• 4: I. E. Sutherland, A futures market in computer time, Communications of the ACM, v.11 n.6, p.449-451, June 1968 [doi>10.1145/363347.363396]
• 5: SINGER, N. M., KANTER, H., AND MOORE, A. Prices and the allocation of computer time. Proc. AFIPS 1968 Fall Joint Comput. Conf., Vol. 33, Pt. 1, MDI Publications, Wayne, Pa., pp. 493-498.
• 6: SMIDT, S. The use of hard and soft money budgets, and prices to limit demand for centralized computer facility. Proc. AFIPS 1968 Fall Joint Comput. Conf., Vol. 33, Pt. 1, MDI Publications,. Wayne, Pa, pp. 499-509.
• 7: MARCHAND, M. Priority pricing with application to timeshared computers. Proc. AFIPS 1968 Fall Joint Comput. Conf., Vol. 33, Pt. 1, MDI Publications, Wayne, Pa., pp. 511-519.
• 8: NIELSEN, N. R. Flexible pricing: an approach to the allocation of computer resources. Proc. AFIPS 1968 Fall Joint Comput. Conf., Vol. 33, Pt. 1, MDI Publications, Wayne, Pa., pp. 521-531.
• 9: GILL, S., AND SAMET, P. A. Charging for computer time in universities. Comput. Bull. 13, 1 (Jan. 1969), 14-16.
• 10: HOOTMAN, J. T. The pricing dilemma. Datamation 15, 8 (Aug. 1969), 61-66.

INDEX TERMS

Keywords:
allocation mechanims, charging, computer pricing, costing, flexible pricing, pricing, priority charges, resource allocation, user motivation