CompTIA Cloud Essentials+ (CLO-002)Business Principles of Cloud EnvironmentsEasy
A small startup is evaluating cloud providers for its new application. They have limited upfront capital and prefer a payment model where they only pay for the resources they consume, without large initial investments in hardware or software licenses. Which financial model does this scenario describe?
- ATotal Cost of Ownership (TCO)
- BReturn on Investment (ROI)
- COperational Expenditure (OpEx)
- DCapital Expenditure (CapEx)
Show answer & explanationAnswer & explanation
Correct answer: C. Operational Expenditure (OpEx)
Operational Expenditure (OpEx) refers to the ongoing costs of running a business, which in cloud computing, means paying for services as they are consumed, aligning with the startup's preference for no large upfront investments.
Why the other options are wrong
- A. TCO is a comprehensive financial assessment, not a payment model itself.
- B. ROI measures the profitability of an investment, not a financial expenditure model.
- D. CapEx involves large, upfront investments in physical assets, which the startup wants to avoid.
Operational Expenditure (OpEx)
Funds used to run the day-to-day operations of a business, often characterized by pay-as-you-go or subscription models in cloud computing.
- No large upfront costs.
- Costs scale with usage.
- Treated as an expense in accounting, often tax-deductible in the current year.
Memory trick: CapEx buys assets, OpEx pays for acts.