Find the utilisation at which a reservation beats on-demand, including any up-front payment spread across the term.
A reservation is a fixed monthly charge for the whole term, so the question is never the headline discount but how many hours you would have bought at on-demand rates instead. Dividing the committed monthly cost by the on-demand hourly rate gives that hour count directly, and expressing it as a share of 730 turns it into a utilisation threshold you can check against your own metrics. Commitments are the largest discount available without renegotiating an agreement, but they are the wrong tool for bursty or seasonal capacity — below the break-even utilisation you pay more than you would have on demand. Rates differ by region, family and agreement, so confirm both sides of the comparison on your provider's pricing page.
Reserved vs On-Demand
committed monthly = reserved rate × 730 + up-front ÷ term months; break-even hours = committed monthly per instance ÷ on-demand rate; break-even utilisation = break-even hours ÷ 730.
committed monthly = reserved rate × 730 + up-front ÷ term months; break-even hours = committed monthly per instance ÷ on-demand rate; break-even utilisation = break-even hours ÷ 730. A reservation is a fixed monthly charge for the whole term, so the question is never the headline discount but how many hours you would have bought at on-demand rates instead. Dividing the committed monthly cost by the on-demand hourly rate gives that hour count directly, and expressing it as a share of 730 turns it into a utilisation threshold you can check against your own metrics.
Commitments are the largest discount available without renegotiating an agreement, but they are the wrong tool for bursty or seasonal capacity — below the break-even utilisation you pay more than you would have on demand. Rates differ by region, family and agreement, so confirm both sides of the comparison on your provider's pricing page.
This calculator takes 6 inputs: Instances under consideration, On-demand rate, Committed hourly rate, Up-front payment per instance, Commitment term, Hours each instance actually runs. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.
Yes. Spreading the up-front across the term raises the effective monthly cost of the commitment, which pushes the break-even hours up. All-upfront usually buys a slightly deeper discount, but it also means the money is gone if the workload disappears in month four.