A system and method for autoscaling a multi-tier application, that has components executing on a plurality of tiers of a virtual data center, allocates resources to each of the plurality of tiers based on cost and performance. An application performance is determined, and a new application performance is estimated based at least partially on an application reservation and an application limit. An optimized utility of the application is calculated based on the cost to execute the application, the application reservation, and the application limit. A scaling factor for each tier is then determined to scale up or down a number of virtual machines operating in each of the tiers.