Lesson 1 of 3
Reserved Instances & Savings Plans
Evaluate commitment discount options across AWS, Azure, and GCP, and select the right commitment strategy for each scenario type.
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Commitment Discounts: The Core Trade-off
Commitment-based discounts (Reserved Instances, Savings Plans, Committed Use Discounts) offer 40–70% savings over on-demand pricing in exchange for a 1 or 3-year commitment. The risk is commitment misuse: buying too many commitments results in unused capacity you still pay for; buying too few means continued on-demand pricing for workloads that could be discounted. The practitioner's job is to find the right coverage level—typically 70–80% of steady-state usage committed, with the remainder on-demand or spot for flexibility.
Commitment Types by Cloud Provider
AWS
- Standard RIs: max discount, least flexible
- Convertible RIs: can exchange instance type
- Compute Savings Plans: apply across families
- EC2 Instance Savings Plans: tied to instance family
Azure
- Reserved VM Instances: 1 or 3-year term
- Azure Savings Plan for Compute: flexible across regions
- Dev/Test pricing for non-prod workloads
- Hybrid Benefit for Windows/SQL licenses
GCP
- Committed Use Discounts (CUDs): resource-based
- Flexible CUDs: apply across machine families
- Sustained Use Discounts: automatic, no commitment
- Spot VMs: lowest cost, preemptible
Commitment Buying Process
- 1Establish a 30–90 day usage baseline to identify steady-state compute patterns.
- 2Calculate on-demand spend for always-on workloads.
- 3Model coverage scenarios at 60%, 70%, and 80% commitment levels.
- 4Start conservatively (60–70%) for first purchase to reduce risk.
- 5Review utilization monthly and adjust coverage through additional purchases or exchange.
Commit to what is stable and predictable. Keep variable and experimental workloads on-demand.
Practice this topic
Reinforce this lesson with scenario questions tagged Reserved Instances, Savings Plans, Rate Optimization.
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