Cloud computing has changed how software is produced, distributed, consumed, and priced. The cloud paradigm has had a disruptive effect on existing business models and elicited a need for more thoroughly defined business models as well as the tools to represent and compare business models. In this paper, we address this research gap and present a structured approach that allows a systematic design of business models for cloud computing and provides tools to facilitate the business model design process through simulation. The resulting method is specified by means of a meta-model as well as a procedure model and is demonstrated by a software prototype. The developed method has been evaluated in three case studies in the context of Platform as a Service business models.