With IaaS, organizations can vastly reduce, or even eliminate, capital expenses as there is no need for them to own physical servers and networking equipment. Instead, they pay operating expenses, which can be largely matched to their usage.

Moreover, IaaS can significantly reduce the need for organizations to hire or contract IT staff as the provider handles maintenance, cooling, and power. This means that IaaS can be an extremely cost-effective and convenient option for businesses with light usage requirements.

As workloads increase, however, the usage-based pricing of IaaS tends to become less attractive compared to physical hardware, even with upfront costs.