The price of cloud computing continues to plummet.

On Tuesday, at an event in downtown San Francisco, Google unveiled some enormous price reductions across its various services for running software applications and websites and storing large amounts of data. And on Wednesday, at its own event just a few blocks down the street, Amazon followed suit by slashing prices across its own set of cloud services.

"In this business, you’re cheaper for about 24 hours. That’s how quickly the others guys can respond on price," Forrester analyst James Staten told us in discussing Google's price tag. And this proved all too true.

Twenty hours after Google's announcement, Andy Jassy, the man who oversees Amazon Web Services, the world's largest cloud computing business, unveiled a 30 to 40 percent drop on its Elastic Compute Cloud, a means of running software on virtual machines, and a 51 percent drop on its Simple Storage Service, a way of storing data. He also said that prices would drop by as much as 61 percent on Elastic MapReduce, a way analyzing data.

Amazon's price reductions closely mirrored what Google had done the day before – with the exception of a new pricing scheme Google introduced that addresses a particular egregious problem in the way cloud services have traditionally been priced. What these two sets of massive reductions show is that companies like Amazon were probably charging far higher for their services than it cost to build and run them.

In the past, Amazon had indicated it was running a low-margin business, much the same as its retail and digital goods, but it was probably a very high margins business. And now we've seen an enormous correction.

Startup and developers have raised particular concerns over the cost of running fairly consistent software workloads on cloud services. The cloud made a lot of sense when your workload when up and down – when you were dealing with the ebb and flow of traffic to a website, for instance – but it made more sense to just buy your own hardware if your workload stayed pretty much the same. Google addressed this specifically with its new pricing scheme, and though Amazon did not, the price reductions on its Elastic Compute Cloud should help this issue at least in part.

What this ultimately means cloud computing makes even more sense than it did before. This week was a major turning point of a technology that Staten and Forrestor predict will become a $40 billion business by 2020, capturing 15 percent of the overall information technology market.