Commitments · AWS + Azure
Published
Commitment discounts are the largest single lever on a steady-state cloud bill, and the most commonly mishandled. Bought well, they take up to 72% off on-demand rates for capacity you were going to run anyway. Bought badly, they freeze last year’s mistakes into a three-year contract. This guide covers the instruments, the strategy and the traps.
The AWS instruments
- Compute Savings Plans commit you to an hourly spend on compute for one or three years, and apply across EC2, Fargate and Lambda regardless of instance family, size, region or operating system. Maximum discount is around 66%, and the flexibility is why they are the default choice for most estates.
- EC2 Instance Savings Plans commit to a specific instance family in a specific region, in exchange for a deeper discount of up to around 72%. Right for workloads you are certain will stay put.
- Standard Reserved Instances are the older mechanism: up to around 72% off, limited flexibility, but still the only commitment vehicle for RDS, ElastiCache, OpenSearch, Redshift and DynamoDB reserved capacity. Databases are often the steadiest workloads in an estate, so these RIs are frequently the best-value purchase available.
- Convertible Reserved Instances trade some discount (up to around 66%) for the right to exchange into different instance types during the term.
Each comes in one-year and three-year terms, paid all upfront, partial upfront or no upfront; longer terms and more cash upfront buy deeper discounts.
The Azure and Google equivalents
Azure offers reserved instances (up to around 72% off, with the notable ability to exchange or refund within limits) and a savings plan for compute that mirrors the AWS model. Azure Hybrid Benefit stacks existing Windows Server and SQL Server licences on top, which for Microsoft-heavy estates is often worth more than the reservation itself. Google Cloud sells committed use discounts, resource-based or spend-based, reaching similar territory. The strategy below applies to all three platforms, and our Azure and Google Cloud guides cover each platform’s wider cost levers.
The strategy
- Optimise first, commit second. A commitment locks in a price for a quantity. If the quantity is wrong, the discount compounds the error. Right-size, clean up and re-architect before you sign; our cost optimisation guide covers that sequence.
- Commit to the baseline, not the peak. Cover the usage floor you are confident about, and let genuinely variable load run on demand or on Spot. Coverage of 100% is not the goal; a conservative baseline with utilisation near 100% beats aggressive coverage with idle commitment.
- Watch two numbers. Coverage tells you how much eligible usage is discounted; utilisation tells you how much of what you bought is being used. Buying moves coverage; only running workloads moves utilisation. Both need an owner, and a cost allocation model that shows each team the commitments bought on its behalf.
- Ladder the terms. Staggered expiry dates mean you re-decide a slice of the estate every few months instead of betting everything on one renewal day, and every expiry is a fresh chance to resize.
- Plan against your renewal dates. Commitment work is calendar work. Enterprise agreement and private pricing renewals should be prepared months ahead, from your side of the table, with your own usage data.
When not to commit
Do not commit to workloads scheduled for re-architecture, migration or decommissioning, to estates you have just inherited and do not yet understand, or to a business whose demand is genuinely shrinking. An on-demand premium for a quarter is cheaper than three years of paying for capacity nobody uses.
The independence point
Anyone whose revenue rises with your commitment size has an opinion you should discount. Cloudreason takes no commission from any vendor; commitment strategy sits inside our Managed FinOps retainer, where coverage and utilisation are reviewed continuously rather than at renewal panic. If a renewal date is already close, the Cloud Cost Health Check will tell you within three days what you should be committing to, or talk to us directly.