Definition
A reserved instance, often abbreviated as RI, is a commitment to use specific cloud computing resources for a defined term, typically one or three years. In exchange for this commitment, cloud providers like AWS offer significant discounts compared to on-demand pricing. This model allows organizations to achieve substantial cost savings on predictable, long-term workloads. For instance, a company running a critical database that needs to be available 24/7 would purchase reserved instances for those database servers to lock in lower costs. Unlike spot instances which can be interrupted, reserved instances provide stable capacity and pricing. Understanding reserved instances is crucial for cloud financial management and is frequently tested on AWS certification exams such as the AWS Certified Solutions Architect Associate.