Availability is one of the most essential attributes of qualities of cloud services. Most popular public cloud services claim availability commitments with corresponding penalties in their SLAs. To gain the maximal profits, cloud providers should choose an optimal penalty strategy in the competitive cloud market. In this paper, we firstly survey the penalty calculation methods of cloud providers. Based on the survey, we propose a competitive penalty model and a corresponding penalty based profit maximization algorithm for cloud providers. According to the model, each cloud provider would choose the best fit penalty strategy to gain the maximal expected profit during the game procedure. The proposed model is evaluated with real data of popular cloud providers with sensitive analysis, and is valuable for cloud providers to define their penalty strategy.