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Cloud Computing · Intermediate

Commitment-Based Discount

Lower cloud pricing in exchange for committing to a level of usage or spend over a term, typically 1 or 3 years.

Definition

Commitment-based discounts include AWS Savings Plans and Reserved Instances, Azure reservations and savings plans, Google Cloud committed use discounts and OCI annual commitments. FinOps teams track commitment utilization (how much of the commitment is used) and coverage (how much eligible usage is covered).

Example

A company covers 70 percent of its steady compute baseline with 3-year commitments and leaves spikes on demand.

Exam tip

Low utilization means you over-committed; low coverage means you are paying on-demand rates for steady usage.

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