In cloud computing, particularly in Amazon Web Services (AWS), Reserved Instances are a billing option that allows users to reserve Amazon EC2 computing capacity for 1 or 3 years, in exchange for a significant discount compared to on-demand instance pricing.

• Reserved Instances can provide a significant discount compared to on-demand instance pricing.
• They provide a capacity reservation, offering a sense of assurance for users who have specific capacity requirements.

Reserved Instances work by allowing users to reserve Amazon EC2 computing capacity for 1 or 3 years.

• Users pay upfront for the reservation and then pay a lower rate for the instances they use.
• They are ideal for users with predictable workloads and long-term requirements.

A company, DataCorp, has a predictable workload that runs continuously throughout the year. Instead of using on-demand instances, which can be more expensive, DataCorp purchases Reserved Instances. This allows them to reserve the capacity they need and save money over the long term.