EC2 Reserved Instances: 3-Year All Upfront for Maximum Savings
A company runs database servers that require consistent EC2 capacity 24/7 for the next 3 years. Which EC2 purchasing option provides the greatest discount compared to On-Demand pricing?
Quick Answer
The answer is Reserved Instances with a 3-year term and all upfront payment, as this purchasing option provides the greatest discount compared to On-Demand pricing. AWS offers tiered savings for committing to consistent, predictable workloads, and the 3-year all upfront Reserved Instance delivers up to a 72% discount over On-Demand rates because you pay the entire cost upfront in exchange for the longest commitment term. On the AWS Certified Cloud Practitioner CLF-C02 exam, this concept tests your understanding of cost optimization for steady-state usage—database servers running 24/7 for three years are a textbook scenario for this option. A common trap is choosing a 1-year term or partial upfront payment, but remember that longer commitment and higher upfront payment always yield deeper savings. Memory tip: think "3-All-Up" for "3-year, All upfront, Ultimate discount."
⚠ Common exam trap
Many candidates confuse Spot Instances as the cheapest option overall, but the question specifies 'consistent EC2 capacity 24/7 for the next 3 years,' which disqualifies Spot Instances due to their lack of reliability and potential for termination, making Reserved Instances the correct choice for maximum discount under those constraints.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Reserved Instances (3-year, all upfront)
Reserved Instances (RIs) with a 3-year term and all upfront payment provide the highest discount compared to On-Demand pricing because they commit to a consistent, predictable workload for an extended period. AWS offers significant pricing tiers for RIs, with the 3-year all upfront option yielding up to 72% discount over On-Demand, which is the greatest among all purchasing options for steady-state usage.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Spot Instances
Why it's wrong here
Spot Instances can provide up to 90% discount but can be interrupted by AWS with 2 minutes notice. They are not suitable for database servers that require consistent, uninterrupted availability.
- ✗
On-Demand Instances
Why it's wrong here
On-Demand is the baseline pricing with no commitment and no discount. It is the most expensive option for steady-state workloads.
- ✓
Reserved Instances (3-year, all upfront)
Why this is correct
3-year Reserved Instances with all-upfront payment provide the maximum EC2 discount. For database servers with consistent, predictable 24/7 use over 3 years, this commitment results in the greatest cost savings.
- ✗
Dedicated Hosts
Why it's wrong here
Dedicated Hosts provide physical servers dedicated to a single customer, often for compliance or licensing reasons. They do not provide the greatest discount for standard compute workloads.
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Same concept, more angles
1 more way this is tested on CLF-C02
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. A company wants to purchase EC2 capacity that provides a discount over On-Demand pricing and is available only when AWS has excess capacity, with the option of interruption with a 2-minute warning. Which option is this?
medium- A.Reserved Instances
- B.On-Demand Instances
- ✓ C.Spot Instances
- D.Dedicated Instances
Why C: Spot Instances (Option C) are correct because they offer a significant discount over On-Demand pricing but can be interrupted by AWS with a 2-minute warning when AWS needs the capacity back. This matches the scenario of purchasing EC2 capacity that is available only when AWS has excess capacity and includes the risk of interruption.
JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This CLF-C02 practice question is part of Courseiva's free Amazon Web Services certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the CLF-C02 exam.