Cloud computing aims to offer utility based IT services by interconnecting large number of computers through a real-time communication network such as the Internet. There has been a significant increase in the power consumption by the data centres that host the Cloud applications because of the growing popularity of Cloud Computing in more and more organisations involved in various fields. Hence, there is a need to develop solutions that aim to save energy consumption without compromising much on the performance. Building such solutions would not only help in reducing the carbon footprint but would also cut down the costs without much compromise on SLA violations thereby benefitting the cloud service providers. In this paper, Simulated Annealing Optimizing Technique has been used for the purpose of continuously optimizing the placement of the VMs (Virtual Machines) over the hosts in order to minimize the power consumption hence providing cost benefits to the service provider. The results make it clearly evident that by making use of virtualisation at the data centre level and the optimizing the virtual resource allocation could significantly reduce the power consumption by the servers.