FinOps / Guide 5
Reservations, savings plans and committed use discounts
Paying less for the steady baseline: the options in each cloud, how much to commit, and how to keep commitments used.
Once a workload has been right-sized and runs steadily, you can pay a lot less for it by committing to one or three years of usage. Each cloud offers two kinds of commitment: one tied to a specific resource type (deeper discount, less flexible) and one tied to an hourly spend (smaller discount, more flexible). Google Cloud also discounts long-running VMs automatically. This guide compares the options and explains how to commit without locking in waste.
The options compared
| Azure | AWS | Google Cloud | |
|---|---|---|---|
| Automatic, no commitment | - | - | Sustained use discounts: up to 30% for VMs running most of the month (some machine series only) |
| Commit to a resource type | Reservations: VMs, databases, storage and more. Up to 72% for VMs (Microsoft's example: 3-year, SUSE Linux, East US) | Reserved Instances (EC2, RDS and others) and EC2 Instance Savings Plans (one instance family in one Region): up to 72% | Resource-based committed use discounts (vCPU and memory in a region): up to 55%, or 70% for memory-optimized; up to 37% for 1 year |
| Commit to an hourly spend | Savings plan for compute: VMs, App Service, Functions Premium, Container Instances, Container Apps and more. Microsoft quotes 11% to 65% | Compute Savings Plans: EC2, Fargate and Lambda, any family or Region, up to 66%. Database Savings Plans: up to 35% | Flexible (spend-based) committed use discounts: Compute Engine, GKE and Cloud Run; 28% for 1 year, 46% for 3 years |
| Interruptible capacity | Spot VMs: up to 90% | Spot Instances: up to 90% | Spot VMs: up to 91% |
| Licences you already own | Azure Hybrid Benefit for Windows Server and SQL Server | Bring your own licence; License Manager | Bring your own licence on sole-tenant nodes |
| Terms | 1 or 3 years; pay up front or monthly at no extra cost | 1 or 3 years; no, partial or all up front | 1 or 3 years (resource-based commitments for some resources go longer) |
Discounts vary by service, region, operating system and term, so the maximums above are best cases. Check the pricing calculator for your actual sizes before buying.
Order matters: right-size first
- Delete what nobody uses (guide 06).
- Right-size what's left (guide 03).
- Schedule non-production (guide 04).
- Commit to the steady baseline that remains.
Committing first locks in today's oversized fleet for years. Committing to VMs that are switched off at night means paying for hours you don't use.
How much to commit
Look at the last 30 to 60 days of usage and find the baseline: the level your usage never drops below. Commit to that, not to the average or the peak. Everything above the baseline stays on pay-as-you-go.
- Start with 60 to 80% of the baseline and add more each quarter as you gain confidence. Several smaller purchases are easier to manage than one big one, and they expire at different times.
- Prefer 1-year terms while workloads are still changing. Move to 3-year terms for platforms you know will run that long.
- Use the flexible option for change: if the VM family, region or service may change, a savings plan or flexible CUD keeps the discount while you move.
- Use the specific option for stable estates: databases and long-lived VM families that won't change get the deepest discount from reservations, Reserved Instances or resource-based CUDs.
- Use the recommendations: Azure Advisor, AWS Cost Explorer and Google Cloud's CUD analysis all suggest an amount based on your history.
Can you get out of it?
| Azure | AWS | Google Cloud | |
|---|---|---|---|
| Specific commitments | Reservations can be exchanged for another reservation (prorated). Cancellation currently has no fee; Microsoft says a 12% early termination fee will apply in future. Eligible reservations can be traded in for a savings plan. | Standard Reserved Instances can be sold on the Reserved Instance Marketplace; Convertible RIs can be exchanged for others of equal or greater value | Resource-based commitments can't be cancelled |
| Spend commitments | Savings plans can't be cancelled or refunded | Savings Plans can't be cancelled or changed after purchase | Spend-based commitments can't be cancelled |
Treat every commitment as a contract you will see through. That's another reason to start small and add over time.
Scope and sharing
Apply commitments as widely as your organisation allows, so unused hours in one team are picked up by another:
- Azure: shared scope (the whole billing account or enrolment), or a management group, rather than a single subscription.
- AWS: Savings Plans and RIs are shared across the accounts in the organisation by default (discount sharing can be turned off per account).
- Google Cloud: spend-based CUDs apply across the billing account; turn on CUD sharing so resource-based CUDs apply across projects.
Keep them used
A commitment saves money only when it's used. Check two numbers every month:
| Measure | Target | Where to see it |
|---|---|---|
| Utilisation: how much of what you bought is being used | 95% or higher | Azure: Reservations and Savings plans blades. AWS: Savings Plans and RI utilisation reports in Cost Explorer. Google Cloud: CUD analysis in Cloud Billing. |
| Coverage: how much of your eligible usage is discounted | Steadily rising toward 70 to 80% of the baseline | The same reports, coverage view |
Low utilisation usually means something was resized, moved or deleted after the purchase. Exchange or trade in where possible, and set expiry reminders 60 days ahead so renewals are a decision, not an accident.