AWS Certified Cloud Practitioner (CLF-C02)Cloud ConceptsHard
A company runs a steady-state EC2 workload that costs $0.20 per hour On-Demand. The company purchases a Compute Savings Plan that reduces the effective hourly rate to $0.14 per hour for that usage. Assuming the instance runs continuously for a 730-hour month, how much does the company save per month by using the Savings Plan compared to On-Demand pricing?
- A$146.00
- B$102.20
- C$43.80
- D$29.20
Show answer & explanationAnswer & explanation
Correct answer: C. $43.80
On-Demand monthly cost = $0.20 × 730 = $146.00. Savings Plan monthly cost = $0.14 × 730 = $102.20. Monthly savings = $146.00 − $102.20 = $43.80.
Why the other options are wrong
- A. This is the On-Demand monthly cost itself, not the savings amount.
- B. This is the Savings Plan monthly cost itself, not the amount saved.
- D. This is roughly a 20% difference but does not match the calculated savings amount.
Savings Plans Discount Calculation
Savings Plans offer lower hourly rates than On-Demand pricing in exchange for a commitment to consistent usage, and savings are calculated as the difference between On-Demand and discounted totals.
- Savings Plans provide flexible discounts across instance families/regions
- Savings = (On-Demand rate − Savings Plan rate) × hours used
- Require usage commitment (1 or 3 years)
Memory trick: Commit to usage, AWS commits to a discount.