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.