What is the difference between Spot, Reserved, and On-Demand instances?
Compare AWS Spot, Reserved, and On-Demand instances: pricing, commitment, interruption risk, and which EC2 model to pick to cut cloud costs.
Expected Interview Answer
On-Demand instances are pay-as-you-go with no commitment, Reserved Instances offer big discounts for a 1- or 3-year usage commitment, and Spot Instances sell spare capacity at up to 90% off but can be reclaimed by AWS with short notice.
On-Demand is best for unpredictable, short-lived, or spiky workloads where flexibility matters most. Reserved Instances (and the more flexible Savings Plans) suit steady, always-on baseline workloads you can forecast. Spot Instances are ideal for fault-tolerant, interruptible work like batch jobs, CI, and stateless web tiers, because AWS can terminate them with a two-minute warning when it needs the capacity back.
- On-Demand: maximum flexibility, no upfront commitment
- Reserved: up to ~72% savings for predictable baseline load
- Spot: up to ~90% savings for interruptible workloads
- Mixing all three optimizes cost across a fleet
- Savings Plans add flexibility over classic Reserved Instances
AI Mentor Explanation
On-Demand is buying a match ticket at the gate on the day — full price but you go whenever you like. Reserved is a season pass paid upfront for a guaranteed seat all year at a steep discount. Spot is grabbing a last-minute empty seat the stadium releases cheaply, knowing an official can ask you to move if a pass-holder shows up.
Step-by-Step Explanation
Step 1
Profile the workload
Classify it as unpredictable, steady baseline, or interruptible batch.
Step 2
Cover the baseline
Use Reserved Instances or Savings Plans for the always-on portion you can forecast.
Step 3
Handle spikes flexibly
Use On-Demand for variable bursts you cannot commit to in advance.
Step 4
Exploit spare capacity
Run fault-tolerant, stateless, or batch work on Spot for the deepest discounts.
Step 5
Design for interruption
For Spot, handle the two-minute termination notice with checkpointing or auto-replacement.
What Interviewer Expects
- Clear definition of each pricing model
- Which workload fits which model and why
- Awareness of Spot interruption and the two-minute warning
- Knowledge of commitment terms for Reserved (1 or 3 years)
- Mention of Savings Plans as a flexible alternative
Common Mistakes
- Recommending Spot for stateful, non-interruptible workloads
- Confusing Reserved Instances with reserved capacity guarantees only
- Thinking On-Demand offers a discount
- Ignoring Savings Plans entirely
- Assuming Spot prices are fixed like a coupon
Best Answer (HR Friendly)
“On-Demand means you pay full price with total flexibility, Reserved means you commit for a year or three to get a big discount on steady usage, and Spot means you rent Amazon's spare capacity very cheaply but they can take it back on short notice. Companies mix all three to cut cloud costs.”
Code Example
aws ec2 run-instances \
--image-id ami-0abcd1234 \
--instance-type c6i.large \
--instance-market-options 'MarketType=spot,SpotOptions={MaxPrice=0.05,SpotInstanceType=one-time}' \
--count 1aws ec2 purchase-reserved-instances-offering \
--reserved-instances-offering-id 649fd0c8-1234-5678-9abc-def012345678 \
--instance-count 2Follow-up Questions
- How do Savings Plans differ from Reserved Instances?
- What happens when AWS reclaims a Spot Instance?
- Can you combine Spot and On-Demand in one Auto Scaling group?
- What is the difference between Standard and Convertible Reserved Instances?
- How would you architect a batch pipeline to survive Spot interruptions?
MCQ Practice
1. Which model offers the deepest discount but can be reclaimed by AWS?
Spot uses spare capacity at up to 90% off but can be terminated with a two-minute warning.
2. Which is best for a steady, always-on production database?
Predictable baseline workloads benefit most from a 1- or 3-year commitment.
3. How much warning does AWS give before reclaiming a Spot Instance?
AWS sends a two-minute interruption notice before terminating a Spot Instance.
Flash Cards
On-Demand best for — Unpredictable, spiky, or short-lived workloads needing flexibility.
Reserved best for — Steady, forecastable baseline load committed for 1 or 3 years.
Spot best for — Fault-tolerant, interruptible batch, CI, and stateless workloads.
Spot interruption notice — Two minutes before AWS reclaims the instance.
Flexible commitment option — Savings Plans give discounts with more flexibility than classic RIs.