Cloud pricing models represent the financial framework through which organizations consume and pay for compute, storage, and services from providers like AWS, Azure, and GCP. Commitment-based pricing—reserved instances, savings plans, and committed use discounts—offers up to 72% savings over on-demand rates in exchange for 1-year or 3-year usage commitments. Understanding the tradeoffs between flexibility, savings, and risk is critical: on-demand pricing maximizes elasticity with no long-term lock-in, while commitments provide substantial discounts but require accurate capacity forecasting. The key mental model is coverage vs. utilization—commitments should cover your baseline steady-state workload, leaving variable spikes to on-demand or spot instances, ensuring you maximize discount application without overcommitting to unused capacity.
What This Cheat Sheet Covers
This topic spans 20 focused tables and 105 indexed concepts. Below is a complete table-by-table outline of this topic, spanning foundational concepts through advanced details.
Table 1: Core Pricing Models
Every cloud bill is built from a small set of fundamental pricing constructs. Knowing the tradeoffs between each — flexibility, savings depth, and interruption risk — is the foundation of any cost strategy.
| Model | Example | Description |
|---|---|---|
AWS EC2: $0.096/hour for t3.medium No commitment required | • Pay-as-you-go with no long-term contracts or upfront costs • charged by the hour or second • highest per-unit cost but maximum flexibility for unpredictable workloads | |
AWS: 1-year Standard RI m5.large, us-east-1 Up to 72% discount vs on-demand | • Commit to a specific instance type, region, and term (1 or 3 years) for significant discounts • locks in configuration but offers highest savings for predictable workloads | |
AWS Compute Savings Plan $5/hour commitment, 3-year Up to 66% discount; covers EC2, Fargate, Lambda | • Commit to a consistent dollar-per-hour spend on compute • more flexible than RIs—applies across instance families, sizes, regions, and services • slightly lower maximum discount than RIs but much greater adaptability | |
AWS Spot: $0.0096/hour (~90% off) 2-minute interruption notice | • Purchase unused cloud capacity at steep discounts (up to 90% off) • instances can be reclaimed with short notice • ideal for fault-tolerant, stateless, or batch workloads |