What pricing models do cloud providers offer for compute, and when would you use each?

What the interviewer wants to hear

• On-demand for flexible, short-term or unpredictable use
• Savings Plans or Reserved Instances for steady baseline usage
• Spot or preemptible for interruptible workloads
• Serverless pay-per-use for spiky or low traffic
• Mix models based on the workload pattern

Model answer

The main compute pricing models are on-demand, commitment discounts, spot and serverless. On-demand means paying per second or hour with no commitment; it is the most flexible but the most expensive, so it suits new projects, short tests and unpredictable spikes. Savings Plans and Reserved Instances give large discounts, often 30 to 70 percent, in exchange for a one or three year commitment, so I use them for the steady baseline that always runs. Spot or preemptible VMs are spare capacity at up to 90 percent off, but they can be taken back, so they fit batch jobs, CI runners and stateless workers. Serverless services like Lambda or Cloud Run charge only when requests run, which is great for low or spiky traffic. A good strategy combines them: commitments for the baseline, on-demand for peaks and spot for fault-tolerant work.

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