An application runs on c5.xlarge EC2 instances 24 hours a day, 7 days a week in us-east-1. The workload is stable and will not change instance type for at least 12 months. The team wants to reduce compute costs by 30 to 40 percent compared to On-Demand pricing. Which purchasing option achieves this with the lowest financial risk?
A 1-year Standard RI matches the 12-month stability horizon and delivers 30–40 percent savings versus On-Demand. All Upfront provides the deepest discount; Partial Upfront reduces the upfront cash requirement with a slightly lower overall saving. The 1-year commitment limits risk compared to a 3-year commitment for an uncertain future period.
Why this answer
A 1-year Standard Reserved Instance (RI) with All Upfront or Partial Upfront payment offers a 30-40% discount over On-Demand pricing for a stable, always-on workload. This option provides the lowest financial risk because it commits to a fixed instance type and region for only one year, matching the workload's stable nature without the flexibility premium of Convertible RIs or the interruption risk of Spot Instances.
Exam trap
The trap here is that candidates may choose the 3-year Convertible RI (Option D) for its higher discount percentage, overlooking the fact that the longer commitment and unnecessary flexibility introduce greater financial risk for a stable, unchanging workload.
How to eliminate wrong answers
Option B is wrong because Spot Instances can be interrupted with as little as a 5-minute warning, which introduces significant financial and operational risk for a workload that must run 24/7 without interruption. Option C is wrong because scaling down to zero instances during off-peak hours would violate the requirement that the application runs 24/7, and it does not address the need to reduce costs for the always-on baseline. Option D is wrong because a 3-year Convertible Reserved Instance, while offering a higher discount percentage, introduces greater financial risk due to the longer commitment period and the unnecessary flexibility to change instance types, which the workload does not require.