Which term describes the practice of precommitting to a cloud service provider to obtain a reduced rate?

• A. Wasted Usage
• B. On-Demand Rate
• C. Cost Avoidance
• D. Reservations/Commitments

Answer: (D)

Precommitting to cloud capacity in exchange for a lower price is about securing a reservation or commitment. By agreeing to a term—often one to three years—and sometimes paying upfront, you lock in a lower per-unit rate compared with pay-as-you-go pricing. This approach is what cloud providers call reservations or committed use, seen in examples like Reserved Instances or Savings Plans. It’s well-suited for predictable workloads where you can honor the commitment in exchange for meaningful cost savings, at the expense of reduced flexibility. The other terms don’t describe this pricing mechanism: on-demand pricing is the no-commitment model, wasted usage isn’t a pricing term, and cost avoidance is a broad concept rather than the specific precommitment method.