Since working for a financial company I discovered how risk is the main driver for financial tools. The more, one side of a transaction, is taking risks the more benefits it will receive.
Almost every transaction is based on a “risk/reward” approach.
This is particularly visible with AWS. The risk for AWS is that hardware kits are not used so:
- when AWS takes most of the risk, allowing customers to turn things on and off at any time, the price is high (i.e. On-Demand).
- when on the other spectrum, the customer take most of the risk by allowing AWS to turn VM off (i.e. Spot instances)
- in between there are the RIs where the same logic applies
- an EDP gives some security to AWS (cash in the bank) but a lot of flexibility to the end-customer, so the discount is less than RI but better than OD
- savings plans are strange as more risk is on AWS while discount is equivalent to RI, investigating!