Reserved vs On-demand Break-even Calculator

Commitments can lower hourly rates but may include upfront payments. This calculator estimates the usage point where commitments break even versus on-demand.

Inputs

On-demand ($ / hour)
Committed ($ / hour)
Upfront cost ($)
Hours per month

Results

Hourly savings
$0.05 / hr
Break-even usage
6,667 hours
Monthly on-demand
$87.60
Monthly committed
$54.75
Monthly savings (excluding upfront)
$32.85

Example scenario

  • On-demand $0.12/hr vs committed $0.075/hr with $300 upfront → estimate break-even hours.

Included

  • Break-even usage estimate from hourly savings and upfront cost.
  • Monthly savings estimate excluding upfront (for planning).

Not included

  • Term length, discount rate, and flexibility risk (use a full ROI model for decisions).
  • Provider-specific commitment utilization constraints.

How we calculate

  • Hourly savings = on-demand hourly − committed hourly.
  • Break-even hours = upfront ÷ hourly savings (if savings > 0).
  • Monthly savings = hourly savings × hours per month (excluding upfront).

FAQ

What if committed hourly is higher than on-demand?
Then there is no break-even: the commitment is not cheaper under the assumptions provided.
Does this include partial upfront or term length?
No. This is a simplified break-even estimate. For a full ROI model, incorporate the term, discount rate, and flexibility risk.
What should I use for hours per month?
730 is a common approximation. If you have non-24/7 workloads, use your expected billable hours.

Related tools

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Disclaimer

Educational use only. Not legal, financial, or professional advice. Results are estimates based on the inputs and assumptions shown on this page. Verify pricing and limits with your providers and documentation.

Last updated: 2026-01-06