Practise vocabulary for cloud pricing models (on-demand, reserved, savings plans, spot, committed use), pricing calculators, and TCO (Total Cost of Ownership) analysis.
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"On-demand" cloud pricing means:
On-demand is the default and most expensive option: you pay the full list price with no commitment. Use cases: unpredictable workloads, short-lived experiments, burst capacity above your reserved baseline. On-demand is the starting point; FinOps optimisation involves moving steady-state workloads to reserved or savings plans.
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A 3-year Reserved Instance compared to a 1-year Reserved Instance:
AWS discount tiers (approximate, no upfront): 1-year RI ~40% off, 3-year RI ~60% off. With all-upfront payment, discounts reach 72% for 3-year. The trade-off: 3-year commits you to a specific instance type for 3 years. If the workload changes or a better instance type launches, you are locked in. Savings Plans offer similar discounts with more flexibility.
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TCO (Total Cost of Ownership) analysis in a cloud context compares:
TCO analysis is used to justify cloud migration: "On-premises: $2.4M over 5 years (servers, rack space, power, cooling, staff). Cloud equivalent: $1.8M over 5 years (EC2 reserved + managed services + reduced ops staff). TCO saving: $600K." Cloud providers offer TCO calculators (AWS TCO Calculator, Azure TCO Calculator) to assist with this analysis.
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GCP "Committed Use Discounts" are analogous to AWS:
GCP Committed Use Discounts (CUDs): resource-based CUDs commit to specific machine types; spend-based CUDs commit to a minimum spend level across eligible services (similar to AWS Savings Plans). GCP also offers Sustained Use Discounts (SUDs) — automatic discounts for VMs running more than 25% of a month, requiring no commitment at all.
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A cloud pricing calculator is used to:
Cloud pricing calculators (AWS Pricing Calculator, Azure Pricing Calculator, GCP Pricing Calculator) let architects model costs before building. Input: "3 × m5.large, 2TB EBS gp3, 10TB S3, 5TB egress" → estimate: "$1,847/month." Essential for budgeting new projects, architecture decisions (serverless vs. containers vs. VMs), and vendor comparison.