Unit economics and cost allocation
Divide the bill by what it buys, so each request kind, service and team carries its own cost, and "the cloud bill went up" becomes a specific answer.
Total spend tells you almost nothing. Cost per unit of work, and who owns it, tells you what to change.
Use it when#
The bill grew 30% and revenue grew 10%, and nobody can say where the gap is.
Teams do not see what their services cost, so nobody has a reason to trim them.
You price a feature, or decide whether a customer is profitable.
How it works#
Pick a unit your users buy, such as a request, an order or an active customer, and divide the cost by it. Then split the cost by owner. Tag every resource with a team and a service, and let shared costs such as the network be spread by usage.
Showback reports each team's spend to it. Chargeback bills it to the team's budget. Start with showback, since it needs no accounting and still changes behavior.
Example: if search costs a tenth of a cent per query and earns a twentieth of a cent, every query loses money, and caching it is worth more than a bigger database.
What it costs#
Allocation is approximate. Shared databases, tagging gaps and untagged spend all force a rule, and teams argue about the rule. Keep it simple, review it quarterly, and do not let the model be so exact that nobody trusts a change to it.
In Quorum#
There is no Design to build here, because both are reports on a Design you already have. Unit economics shows the cost per served request of each request kind, which splits Burn by each kind's share of demand. Cost allocation needs it first and rolls the same figures up per Service and per Team. Rightsizing report finds the idle Nodes behind a bad figure, and Cut the cloud bill uses the reports. See Money and the glossary on operating margin.