Reserved vs On-Demand Cloud Cost Comparison

Summary

Enter on-demand and reserved hourly rates to see break-even point, total savings, and a cost comparison chart over time.

How it works

1. Enter the on-demand hourly rate for the instance type you are evaluating.
2. Enter the effective hourly rate for the reserved instance (or enter the upfront cost plus the discounted hourly rate).
3. Select the reservation term (1-year or 3-year) and how many months you want to project.
4. The calculator computes cumulative costs for both options month by month.
5. The break-even month is where the reserved total crosses below the on-demand total.
6. Savings percentage and total dollar savings are shown for the full projection period.

Use cases

• Deciding whether to purchase EC2 reserved instances before a contract renewal.
• Evaluating 1-year vs 3-year commitment savings for a steady-state database server.
• Justifying a cloud commitment to finance or management with a clear payback timeline.
• Comparing partial-upfront vs no-upfront reserved pricing for the same instance.
• Stress-testing the reservation decision — what happens if the workload ends early?
• Estimating annual cloud infrastructure budget under both pricing models.

Frequently Asked Questions