CompTIA Cloud Essentials+ (CLO-002)Business Principles of Cloud EnvironmentsEasy
A small startup is evaluating different cloud service providers for its new application. They have a limited budget and want to avoid large upfront capital expenditures. Which of the following financial models is MOST aligned with their goal?
- ACapital Expenditure (CapEx)
- BFixed Asset Expenditure (FAE)
- COperational Expenditure (OpEx)
- DReturn on Investment (ROI)
Show answer & explanationAnswer & explanation
Correct answer: C. Operational Expenditure (OpEx)
Operational Expenditure (OpEx) involves paying for services or products as they are consumed, typically on a recurring basis. This model avoids large upfront costs, making it ideal for startups with limited capital.
Why the other options are wrong
- A. CapEx involves large upfront investments in assets, which is contrary to the startup's goal.
- B. FAE is not a standard financial model in cloud computing; it's a synonym for CapEx.
- D. ROI is a measure of profitability, not a financial expenditure model.
Operational Expenditure (OpEx)
Funds used to run day-to-day business operations, typically expensed in the period in which they are incurred.
- Paid as a recurring cost (e.g., monthly, annually).
- No large upfront investment.
- Common in cloud computing for services like SaaS, IaaS, PaaS.
Memory trick: OpEx is like renting a car, CapEx is buying one.