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Generally, cloud computing customers do not own the physical infrastructure, instead avoiding by renting usage from a third-party provider. They consume resources as a service and pay only for resources that they use. Many cloud-computing offerings employ the utility computing model, which is analogous to how traditional utility services (such as electricity) are consumed, whereas others bill on a subscription basis. Sharing "perishable and intangible" computing power among multiple tenants can improve utilization rates, as servers are not unnecessarily left idle (which can reduce costs significantly while increasing the speed of application development). A side-effect of this approach is that overall computer usage rises dramatically, as customers do not have to engineer for peak load limits. In addition, "increased high-speed bandwidth" makes it possible to receive the same. The cloud is becoming increasingly associated with small and medium enterprises (SMEs) as in many cases they cannot justify or afford the large capital expenditure of traditional IT. SMEs also typically have less existing infrastructure, less bureaucracy, more flexibility, and smaller capital budgets for purchasing in-house technology. Similarly, SMEs in are typically unburdened by established legacy infrastructures, thus reducing the complexity of deploying cloud solutions.Cloud computing users avoid (CapEx) on hardware, software, and services when they pay a provider only for what they use. Consumption is usually billed on a utility (resources consumed, like electricity) or subscription (time-based, like a newspaper) basis with little or no upfront cost. Other benefits of this approach are low barriers to entry, shared infrastructure and costs, low management overhead, and imediate access to a broad range of applications. In general, users can terminate the contract at any time (thereby avoiding return on investment risk and uncertainty), and the services are often covered by service level agreements (SLAs) with financial penalties.According to the strategic importance of information technology is diminishing as it becomes standardized and less expensive. He argues that the cloud computing paradigm shift is similar to the displacement of frozen water trade by electricity generators early in the 20th century.Although companies might be able to save on upfront capital expenditures, they might not save much and might actually pay more for operating expenses. In situations where the capital expense would be relatively small, or where the organization has more flexibility in their capital budget than their operating budget, the cloud model might not make great fiscal sense. Other factors having an impact on the scale of potential cost savings include the efficiency of a company's data center as compared to the cloud vendor's, the company's existing operating costs, the level of adoption of cloud computing, and the type of functionality being hosted in the cloud.Among the items that some cloud hosts charge for are (often with extra charges for high-memory or high-CPU instances), data transfer in and out, storage (measured by the GB-month), I/O requests, . In some cases, users can bid on instances, with pricing dependent on demand for available instances.