# Core Concepts

### Cloud Cost & Rate Optimization

#### Ways to reduce cost on the cloud

There are three main ways to reduce the money you spend on cloud usage:

1. *Shut down* services, instances, VMs, databases, etc.
2. *Optimize the workloads* running on instances, VMs, databases, etc.
3. *Reduce the rate you pay* for running instances, VMs, databases, etc.

Option 1 is usually accompanied by products being deprecated, losing customers, or going out of business. This is usually not an effective way to reduce the money you spend on cloud usage while keeping your services up and running.

Option 2 means **major** engineering effort to look at what the code running on the services is doing and how to potentially optimize it. This is something that almost every company does but takes time and effort, sometimes on the scale of multiple years.

Option 3 means simply changing the rate you pay for consuming cloud services. This can be done in two ways:

1. Running your workloads on **spot instances** which may be terminated at any point in time by the cloud provider, but offer deep discounts. Only certain types of workloads (stateless) can run on spot instances. Spot instances can be an important and good way to save money on eligible workloads.
2. Utilizing **Commitments** to cloud providers.

**Commitments** come in the following flavors:

* Reserved Instances (RIs on AWS & Azure)
* Savings Plans (SPs on AWS & Azure)
* Committed Use Discounts (CUDs on GCP)

These Commitments represent a promise by the customer to commit for **one or three years** that they will pay the cloud provider a monthly fee that would cover the usage of a cloud service or resource at a discounted rate. The customer then gets to pay less than they normally would if they use that service or resource (whereas they would normally pay list pricing, also known as "on-demand" pricing) and the cloud provider gets a guaranteed revenue commitment for one or three years. Win-win, right? But wait, what happens if the customer isn't sure that they will use that service or resource for one, let alone three, years?

That's why Archera created **Insured Commitments**, allowing customers to reduce the rate they pay for cloud services with as little as a **30-day term**.


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