Cloud Pricing Models
The purchase options for cloud compute — on-demand, committed use, and spot — which differ by up to 90% for identical hardware.
On-demand: full price, no commitment, cancel any time. The right choice for unpredictable workloads and for anything you may not still be running next quarter.
Committed use (reserved instances, savings plans): typically 30–70% off in exchange for a one- or three-year commitment. The right choice for baseline capacity, which every steady system has. The risk is committing to a shape you outgrow — modern flexible plans that commit to spend rather than to a specific instance type substantially reduce it.
Spot / preemptible: 60–90% off, reclaimed with a short warning. Genuinely usable for batch, CI, stateless workers behind a queue and fault-tolerant training jobs — anything that can be interrupted and resumed. Not for stateful services without careful draining.
The common pattern is a portfolio: committed capacity for the steady baseline, on-demand for the variable layer, spot for interruptible work. And an expiring commitment silently reverts to on-demand, which is a recurring cause of a step change in the bill.