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Commonly confused · Cloud Computing

On-Demand vs Reserved vs Spot Instances: What's the Difference?

On-demand instances are billed by the second or hour with no commitment. Reserved instances and savings plans give large discounts in exchange for a one- or three-year commitment. Spot instances use spare capacity at the deepest discount but can be reclaimed by the provider with short notice.

On-Demand Instances

Full definition
vs

Reserved Instances / Savings Plans

vs

Spot Instances

Full definition
On-Demand InstancesReserved Instances / Savings PlansSpot Instances
CommitmentNone1 or 3 yearsNone
Discount vs on-demandNone (baseline)Up to about 72%Up to about 90%
Interruption riskNoneNoneCan be reclaimed with about 2 minutes notice (AWS)
Best forShort-term, unpredictable, or new workloadsSteady-state, predictable workloadsFault-tolerant, flexible, batch workloads
Azure / Google equivalentPay-as-you-goReservations, committed use discountsSpot VMs
ExampleTesting a new app for a weekProduction database running 24/7Big data processing, CI build runners
Remember it

On-demand is flexible, reserved is cheap for commitment, spot is cheapest but can vanish.

Exam tip

Match the workload to the purchase option. 'Can tolerate interruption' means spot; 'runs constantly for years' means reserved or savings plans; 'short-term and unpredictable' means on-demand.

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