How the break-even works
A Reserved Instance (AWS), Reserved VM Instance (Azure), or Committed Use Discount (GCP) trades a 1 or 3 year commitment for a lower rate. The catch: you pay for the commitment whether you use it or not. So the real question is not "how big is the discount," it's "will I use it enough to beat paying on-demand for only the hours I actually run."
The break-even utilization is simply 1 − discount. A 40% discount breaks even at 60% utilization: if you expect to use the resource more than 60% of the term, committing wins. Less than that, on-demand is cheaper. This calculator drives its Buy / Marginal / Don't-buy verdict off your expected utilization versus that break-even, not off the size of the discount.
AWS Reserved Instances and Savings Plans
AWS commitments come in no-upfront, partial-upfront, and all-upfront. More upfront means a bigger discount. Savings Plans commit to a dollars-per-hour spend rather than a specific instance, so over-committing (paying for more than you use) is the common way teams lose money here.
Azure Reserved VM Instances and Savings Plans
Azure commitments cost the same whether you pay upfront or monthly, so the payment choice is about cash flow, not price. Reserved Instances lock to a VM family; Savings Plans apply to compute spend more broadly.
GCP Committed Use Discounts
GCP CUDs are billed monthly with no upfront. Resource-based CUDs commit to vCPU and memory in a region; flexible (spend-based) CUDs commit to a dollar amount and apply across families at a lower rate. CUDs auto-apply to matching usage.