What is Committed Use Discount?
Definition
A reduced rate offered by subscription services in exchange for committing to a minimum usage level or contract duration.
Understanding Committed Use Discount
Committed use discounts reward predictability. Cloud providers like AWS, GCP, and Azure offer reserved instance pricing (30-72% off) when customers commit to 1-3 year terms. Similarly, SaaS annual plans are a form of committed use discount — committing to 12 months earns 15-25% savings.
For businesses, committed use discounts can significantly reduce costs but carry risk if needs change. The key is estimating your minimum guaranteed usage accurately. For personal subscriptions, annual plans are the most accessible form of committed use discounts — ideal for services you are confident you will keep long-term.
Related Terms
Annual Subscription
A subscription plan billed once per year, typically offering a discount compared to the equivalent monthly pricing.
Subscription Savings
The money saved by optimizing subscriptions through cancelling unused services, downgrading plans, switching to annual billing, or using bundles.
Pricing Model
The strategy a subscription service uses to structure its pricing, including flat-rate, tiered, usage-based, or hybrid approaches.
Cloud Computing
The delivery of computing services — including servers, storage, databases, and software — over the internet on a subscription or pay-per-use basis.