A business analyst is examining a report and notices compute costs are very high for...

Reserved instances are a discount billing concept in which businesses can obtain significant discounts compared to standard on-demand cloud computing prices in return for committing to a specified level of usage1. Reserved instances are not physical instances, but rather a billing discount applied to the use of on-demand instances in the account2. Reserved instances can save up to 75% over equivalent on-demand capacity3. By switching the virtual machines to reserved instances, the analyst can best reduce costs without impacting performance, as long as the application’s usage pattern is predictable and consistent. Decommissioning a virtual machine might affect the performance and availability of the application. Changing to a pay-as-you-go plan might not reduce costs if the application’s usage is high and stable. Converting the application to a SaaS solution might require additional development and migration efforts, which are not feasible in this scenario. References:

1: AWS Cost Management & Optimization

2: Amazon Elastic Compute Cloud

3: VMware Aria Cost powered by CloudHealth