A flexible pricing model offering lower prices in exchange for a one- or three-year usage commitment.
Savings Plans are a commitment-based pricing model where you pledge a minimum dollar amount per hour (e.g., $10/hr) over a one- or three-year term in exchange for discounts of up to 72% versus On-Demand rates. Compute Savings Plans apply automatically across EC2, Fargate, and Lambda regardless of instance family, region, or OS, while EC2 Instance Savings Plans lock in a specific instance family within a region for a steeper discount. For the exam, remember they are more flexible than Reserved Instances and require no capacity reservation, but unused commitment is still billed, so overcommitting wastes money.
A pricing model giving a large discount for committing to specific instance usage for one or three years.
Reserved Instances (RIs) are a billing discount applied to On-Demand EC2 usage when a customer commits to a consistent instance type and AWS Region for a one- or three-year term. Payment options range from No Upfront to Partial Upfront to All Upfront, with deeper discounts for larger upfront payments and longer terms. Standard RIs lock in the instance family, while Convertible RIs trade some discount for the flexibility to change instance attributes during the term. The key exam distinction is between RIs and Savings Plans: Compute Savings Plans apply discounts automatically across instance families, sizes, and even Fargate and Lambda, making them more flexible. RIs suit stable workloads with a known instance type; Savings Plans suit teams wanting coverage without specifying instance details.
Spare EC2 capacity offered at steep discounts that AWS can reclaim with short notice.
Spot Instances let customers use spare EC2 capacity at discounts that can reach up to 90% compared to On-Demand pricing, making them the lowest-cost EC2 purchasing option. AWS can reclaim a Spot Instance with a two-minute warning when capacity is needed elsewhere, so workloads must tolerate interruption gracefully — batch processing, big-data analysis, and containerized jobs are classic fits. The key exam distinction is between Spot, On-Demand, and Reserved Instances: On-Demand has no commitment and full availability; Reserved Instances offer predictable discounts in exchange for a one- or three-year commitment; Spot offers the deepest discount but no availability guarantee. Choosing Spot for a steady, latency-sensitive production service is a common CLF-C02 trap.
Paying for compute capacity by the second or hour with no commitment.
On-Demand pricing lets customers pay for compute capacity — such as EC2 instances or Fargate tasks — by the second or hour with no upfront payment and no long-term contract. Capacity can be launched or terminated at any time, making it the default choice for applications with unpredictable or short-term usage patterns. The key exam nuance is the cost trade-off: On-Demand carries the highest per-unit price among AWS’s compute purchasing options. When a workload runs steadily for a year or more, Reserved Instances or Savings Plans can reduce that cost by up to 72%, making On-Demand the wrong choice for predictable, baseline workloads. Exam questions often test whether candidates can correctly match workload characteristics — spiky, new, or short-lived — to On-Demand, rather than defaulting to it as universally cheapest.
A tool to visualize, understand, and forecast AWS costs and usage over time.
AWS Cost Explorer is an interactive console tool that visualizes historical AWS spending and usage, identifies trends, and forecasts future costs up to twelve months ahead. It offers pre-built reports broken down by service, linked account, region, or cost allocation tag, and it surfaces Reserved Instance and Savings Plans utilization so teams know whether commitments are being fully used. The common exam trap is conflating it with AWS Budgets: Budgets triggers alerts when spend crosses a threshold you set, while Cost Explorer is for after-the-fact analysis and forecasting, not alerting.
A tool that sets custom cost and usage thresholds and alerts you when they are exceeded.
AWS Budgets lets you set custom thresholds on cost, usage, Savings Plans utilization, and Reserved Instance coverage, then receive email or SNS alerts when actual or forecasted spending approaches or exceeds them. Because alerts can fire before a limit is breached, it acts as a forward-looking guardrail rather than a historical report. The key exam distinction is that Budgets is proactive and threshold-driven, while Cost Explorer is a read-only tool for visualizing past spending patterns. Budgets can also pair with Budgets Actions to automatically apply IAM policies or Service Control Policies when a threshold is crossed, adding enforcement beyond simple notification.
A free tool to estimate the cost of an AWS architecture before deploying it.
AWS Pricing Calculator is a free, browser-based tool that estimates the cost of an AWS architecture before any resources are provisioned. Users add services, configure expected usage (instance types, storage amounts, data transfer volumes), and receive an itemized monthly estimate that can be saved and shared via a unique URL. The key exam distinction is timing: Pricing Calculator is a pre-deployment planning tool, while Cost Explorer analyzes actual spending on already-running resources. Do not confuse it with the retired AWS TCO Calculator, which compared on-premises costs against AWS.
The full cost of a solution over time, including hidden costs like power, cooling, and staff.
Total Cost of Ownership (TCO) is a financial analysis that accounts for every expense tied to a solution across its full lifecycle — not just hardware purchase prices but also power, physical space, cooling, network infrastructure, software licenses, and the staff needed to manage it all. AWS provides the AWS Pricing Calculator to help organizations model these comparisons before migrating. The exam-critical nuance is that TCO analysis almost always reveals on-premises costs to be higher than they appear, because indirect costs like rack space and IT labor are easy to overlook. Do not confuse TCO with CapEx versus OpEx — those terms describe how spending is classified on financial statements, while TCO is about the total magnitude of spend regardless of classification.
The console view that summarizes current charges, usage, and payment information.
The AWS Billing Dashboard is the central console page where account owners see current month-to-date charges, last month’s bill, forecasted spend, and a breakdown by service. It also links to payment methods, invoices, and cost-management tools like AWS Cost Explorer and AWS Budgets. A common exam trap is treating the dashboard and Cost Explorer as interchangeable. The dashboard gives a high-level snapshot without historical trending or filtering; Cost Explorer is a separate tool that analyzes spending over time, groups costs by tag or linked account, and produces forecasts and rightsizing recommendations — the right answer for in-depth usage analysis.