hardMultiple Choice
220-1201 Practice Question: A company uses a public cloud provider for…
A company uses a public cloud provider for compute resources. To reduce costs, they want to use unused capacity at a lower price but accept that the instance may be terminated with short notice. Which pricing model should they choose?
⚠ Common exam trap
It's easy for candidates to confuse reserved instances (commitment discount, no interruption) with spot instances (spare-capacity discount, interruptible) — candidates see 'lower price' and pick reserved without noticing the 'may be terminated with short notice' clause.
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
✓
Spot instance
Spot instances (also called Spot VMs or preemptible instances) let you bid on a cloud provider's unused compute capacity at steep discounts — often 70-90% below on-demand pricing. The trade-off is that the provider can reclaim (terminate) the instance with only a short warning (typically 2 minutes on AWS), which matches the company's stated willingness to accept short-notice termination in exchange for lower cost.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
On-demand instance
Why it's wrong here
On-demand instances provide compute capacity with no upfront commitment or long-term contract, allowing users to pay for compute capacity by the hour or second. While offering maximum flexibility and immediate availability for any workload, they are priced at the full rate and do not provide the significant cost reductions associated with utilizing spare capacity or making long-term commitments. Therefore, they are not the optimal choice for maximizing cost savings when the workload can tolerate termination.
- ✗
Reserved instance
Why it's wrong here
Reserved instances offer substantial cost savings compared to on-demand pricing in exchange for a one-year or three-year commitment to a specific instance type and region. This pricing model is ideal for steady-state workloads with predictable usage, as it guarantees capacity and significantly reduces hourly costs. However, the long-term commitment makes them unsuitable for scenarios where instances might need to be terminated on short notice due to fluctuating demand or budget constraints.
- ✓
Spot instance
Why this is correct
Spot instances leverage unused cloud provider capacity, offering significantly reduced pricing compared to on-demand instances, often up to 90% savings. The trade-off is that these instances can be interrupted or terminated by the cloud provider with short notice (typically two minutes) if the capacity is needed elsewhere. This makes them perfectly suited for fault-tolerant applications, batch jobs, or flexible workloads that can handle interruptions and restart processes without significant impact.
- ✗
Dedicated host
Why it's wrong here
A dedicated host provides a physical server entirely for a single customer's use, offering the highest level of isolation and control over the underlying hardware. While beneficial for specific licensing requirements, regulatory compliance, or bringing existing server-bound software licenses, dedicated hosts are the most expensive compute option. They offer no cost savings benefits for workloads that can tolerate termination and are designed for persistent, isolated environments rather than flexible, interruptible tasks.
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Key term
Public cloud
A public cloud is a computing model where third-party providers deliver IT resources like servers, storage, and applications over the internet to multiple customers on a pay-as-you-go basis.
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JA
Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official CompTIA exam blueprint
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