The pricing models for compute resources in the cloud can be complicated. Some (but not all) variations include the following:
- On-demand instances
- Reserved/prepaid capacity
- Spot instances
- Dedicated instances
On-demand pricing is pretty straightforward: for every hour that a compute resource runs you pay a certain hourly cost. Reserved pricing allows you to significantly reduce your hourly cost by committing, and prepaying, to run a compute resource for an agreed period of time. Spot pricing allows you to establish a maximum bid price for a compute resource and, if there is a resource available at or below that cost, you pay the current spot price. And dedicated instances cost the most, but give you dedicated hardware on which to run your application.