Abstract-An advance in technology unlocks new opportunities for organizations to increase their productivity, efficiency and process automation while reducing the cost of doing business as well. The emergence of cloud computing addresses these prospects through the provision of agile systems that are scalable, flexible and reliable as well as cost effective. Cloud computing has made hosting and deployment of computing resources cheaper and easier with no up-front charges but pay per-use flexible payment methods. However, there is lack of tools to aid decision makers in evaluating the much promised benefits of cloud computing particularly its cost benefit. To fill this gap in tools for evaluating the cost benefit of cloud services as an alternative to on premise computing, a cost modelling system for cloud computing (CCMS) is proposed. A prototype model was developed to simulate the cost incurred on maintaining an on premise IT infrastructure under various usage patterns with the purpose of determining the cost benefit of cloud alternatives. CCMS assists decision makers with insights on cost savings of adopting cloud alternatives and also demonstrate how the utilization capacity and cost of acquisition of an infrastructure can influence the cost savings from cloud alternatives.