AWS Certified Cloud Practitioner (CLF-C02)Cloud ConceptsHard
A company runs a steady-state workload on an On-Demand EC2 instance that costs $0.10 per hour, running continuously 24 hours a day for a full year (365 days). AWS also offers a 1-year Standard Reserved Instance for this instance type with an all-upfront payment of $600 and no additional hourly charge. Based on annual cost alone, how much would the company save by purchasing the Reserved Instance instead of using On-Demand pricing for the full year?
- A$276
- B$600
- C$150
- D$876
Show answer & explanationAnswer & explanation
Correct answer: A. $276
On-Demand annual cost = $0.10 × 24 hours × 365 days = $876. Reserved Instance annual cost = $600 (all upfront, no hourly charge). Savings = $876 − $600 = $276. This demonstrates how Reserved Instances can reduce costs for predictable, steady-state workloads compared to On-Demand pricing.
Why the other options are wrong
- B. $600 is just the Reserved Instance cost, not the savings amount.
- C. $150 does not match the correct subtraction of the two costs.
- D. $876 is the total On-Demand cost, not the savings.
Reserved Instance Savings
Reserved Instances offer discounted pricing compared to On-Demand for steady-state workloads by committing to a 1- or 3-year term.
- All-upfront RIs have no hourly charge
- Savings increase with longer commitment terms
- Best for predictable, continuous workloads
Memory trick: Reserve ahead, save instead.