> For the complete documentation index, see [llms.txt](https://contrxl.gitbook.io/contrxl/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://contrxl.gitbook.io/contrxl/systems-administration/microsoft/az-900/1.-cloud-concepts/1.1-describe-cloud-computing/1.1.5-define-the-consumption-based-model.md).

# 1.1.5 Define the Consumption based Model

Detail on the consumption based model.

### Consumption-based Model

To compare IT infrastructure models, two costs should be considered:

* OpEx : Operational Expenditure : spending money on services or products over time like renting a convention center or leasing a company vehicle.
* CapEx (Capital Expenditure) : typically a one-time, up front cost to purchase or secure a resource. A new building, repaving the car park, buying a company vehicle are examples of CapEx.

Cloud Computing is considered OpEx as it is a consumption-based model. You pay for the IT resources you use, rather than paying for the physical infrastructure etc. This has many benefits:

* No upfront costs.
* No need for costly infrastructure.
* Can pay for more resources if needed.
* Can stop paying for resources if not needed.

In a cloud-based model, you don't have to worry about getting resource needs just right. If you need more VMs, you add more. If demand drops, you remove more.

### Compare Cloud Pricing Models

You typically only pay for services used, which helps:

* Plan and manage operating costs.
* Run infrastructure more efficiently.
* Scale as your business needs change.