Snowflake’s unique market positioning stems from its culpability to adapt to market demand. And its pricing structure is a solid proof.

Traditional pricing models leave users frustrated with underutilized resources or even unpredictable costs.

Users continue to contend with a list of complex pricing charts, a stack of bills, and additional price points they weren’t even aware of. It’s a prevalent challenge at the helm of most subscription pricing structures and for flat fees incurred for a fixed storage space.

Snowflake, the next-gen leader in cloud-based data storage, has chosen to move away from these traditional pricing charts. Unlike its competitors, BigQuery and RedShift.

It’s vamping cloud data warehousing not only through tech innovation, but also by introducing a new methodology for pricing data infrastructure in the modern cloud era.

Snowflake ‘s pricing follows a simple, transparent, and agile structure. One based on usage (consumption) that operates on a very innovative motto: Pay only for what you use.

The logic behind this is straightforward- be unique and value-driven.

You merely pay for what you use. Whether it’s storage space, compute (virtual warehouses), or cloud services, the underlying architectural layers make up the nucleus of Snowflake’s umbrella model.

Here’s how.

For data storage and transfer

The cost depends on the average volume of compressed data (in bytes) stored on the platform on a daily basis. You can store, access, and process this data, irrespective of its format, at any volume. And you pay for the space that you utilize.

“More value, lower the cost of ownership”

– Snowflake’s guiding principle

Unlike its competitors, Snowflake doesn’t offer a basic storage volume at a flat fee or recurring fee. Instead, it entails additional features such as zero-copy cloning, which allows for more storage at a reduced cost.

What happens is that the platform has automatic storage compression, where table data gets automatically shrunk and optimized, meant for bulk onloading and offloading. On the other hand, zero-copy cloning allows users to copy the exact database without duplicating existing data or encroaching extra storage space.

How are customers charged? – per terabyte (used) per month for the compressed storage space. The pricing changes when data is transferred within the same cloud but across different regions, or different clouds.

For compute usage

Snowflake’s compute pricing is dependent on the number of compute resources leveraged. And they aren’t billed the traditional way.

The platform leverages its unique currency called ‘credits.’

They are units that determine how many billable compute resources (virtual warehouse) an user has consumed. It tracks the billable units only when the virtual warehouse is running, not when it’s suspended, i.e., while running a workload, loading data, or performing a query.

The credits differ according to the compute type- virtual warehouses, serverless capabilities, and cloud services.

Virtual warehouse compute consumes credits depending on its size and runtime (billed per second), with a minimum requirement of 60 seconds. And if less than a minute, it can incur additional charges.

One of its key benefits is that you can control the number of Snowflake credits it consumes. It’s user-configured, meaning you can choose size, the runtime, and additional usage caps.

Snowflake allows for resizing while the performance remains linear. For example, doubling the warehouse size will halve the operating time while maintaining the original cost. But resizing to one size larger will cost a full minute’s worth of usage.

Source: Snowflake

Cloud services are powered by compute resources, so they follow the Snowflake credits framework just like virtual warehouses. But there’s something more to note here.

Cloud services are charged only when they exceed 10% of daily compute resources usage. And the 10% adjustment is calculated based on that day’s warehouse usage.

For example, you’ve utilized 200 compute credits and 100 cloud credits on the same day. The 10% adjustment is then subtracted from the compute credits, i.e.,

• 200 * 10% which equals 20 credits.

So, the overall billable credits would boil down to

• 100 cloud credits – 20 adjusted credits = 80 billable credits.

And if in another scenario the overall usage is less than 10% of the daily compute resources, then Snowflake charges for 100 cloud credits in this scenario.

Snowflake’s approach to pricing its resources is unarguably forward-thinking.

The focus is on user needs, not vendor convenience. And the control is relinquished to the customers, helping them exercise flexibility. By doing so, Snowflake is facilitating ease of use that only such a unified and managed service model like theirs can deliver.

It’s a single product, with only different editions with higher levels of service and features.

Source: Snowflake

But there’s a small underlying complexity- users must closely monitor and manage their credit usage to avoid any surprise costs later. With tactical management practices, even this stumbling block can be cracked.

To navigate this complexity, Snowflake adds another tier to its pricing structure, and this is where it all truly ties neatly together- the account type you are leveraging.

An on-demand or a committed capacity purchasing option?

With on-demand, you’ve the promised flexibility to store as much and as little data as you wish. There are no commitments involved.

To avail the on-demand account, you sign up for the service on Snowflake’s website and pay through a credit card every month. The final amount depends on the edition you’re entailing, and the geographical location of the cloud services.

Meanwhile, the capacity account type basically works as an agreement. The user agrees, or instead, commits to spending on a particular amount of storage space, of course, in exchange for bulk credit discounts. And that space has to be utilized entirely within a specific contract period.

This account type comprises a diverse set of services, from hands-on training to professional assistance and price guarantees for the long term.

Irrespective of the account type you opt for, the policy remains the same: you pay for what you use.

Overall, this agile pricing philosophy is insightful. One that has facilitated large enterprises and start-ups in scaling analytics effortlessly and mapping innovative data initiatives without financial guesswork.

Making it a win-win opportunity for both customers and the brand alike.

Snowflake’s pricing strategy could prove to be the guiding principle for modern businesses.

There’s a lack of transparency in a market that facilitates hidden costs without any real value or uniqueness in its offerings.

This is where Snowflake’s pricing strategy makes a 180-degree shift.

Its pricing framework is built on offering businesses true clarity and control over their spend. Snowflake believes that rigid billing practices shouldn’t throttle innovation. But keep pace with the rhythm of modern cloud businesses, especially across fluctuating workloads.

Each pricing for the different architectural layers of Snowflake’s platform is based on paying only for the value that users gauge from it.

As the pricing remains constant, the value increases. And as the value of the Snowflake credit also rises, the pricing remains the same.

Snowflake has built on what customers want the most: value. And a promise that rarely gets delivered on: value for money.