Which term is used to forecast savings using current commitments and commercial agreements?

• A. Reservations/Commitments
• B. Savings Potential
• C. On-Demand Rate
• D. Wasted Usage

Answer: (B)

Forecasting savings from current commitments relies on Savings Potential—the estimated amount you can save by applying existing commitments and commercial terms to your actual usage. This concept looks at how much your spend could drop if you fully leverage reservations, savings plans, and other negotiated discounts rather than paying on a purely on-demand rate. It’s a forward-looking measure used to plan optimization efforts and procurement decisions.

For example, if the typical on-demand cost for a set of resources is $1,000 per month, but your current commitments would bring that down to $750, your savings potential is $250 per month. This helps you decide whether you should adjust commitments, extend terms, or reallocate usage to maximize value.

The other terms refer to different ideas: the actual commitments themselves represent the contracts you’ve already secured, the on-demand rate is the price without any commitments, and wasted usage points to inefficiency from unused or underutilized capacity rather than a forecast of savings.