A method, system and apparatus for on-demand application resource allocation. In accordance with the method of the invention, an anticipated workload can be compared to a measured capacity for an application cluster in one or more server computing nodes in a server farm. If the measured capacity warrants a re-configuration of the application clusters, a new placement can be computed for application server instances in individual ones of the server computing nodes. Subsequently, the new placement can be applied to the server computing nodes in the server farm. In this regard, the applying step can include starting and stopping selected ones of the application server instances in different ones of the server computing nodes to effectuate the new placement.