Updated 25 October 2026 · Published by Zoorik
A reserved instance is a one-year or three-year commitment to a virtual machine (VM) setup, in return for a discount. AWS calls it a Reserved Instance (RI), and Azure calls it a reservation. It’s a billing discount, not a machine.
How reserved instances work in AWS and Azure
On AWS:
- An RI covers only instances with matching attributes, such as instance type and region.
- You pay for the whole term, used or not.
- You can’t cancel an RI, but you might be able to modify, exchange or sell it.
- AWS recommends Savings Plans over RIs.
With Azure Reservations:
- You can refund up to USD 50,000 in a rolling 12 months.
- Hours with no matching VM are lost.
In October 2026, both clouds quote up to 72% off on-demand prices. Prices change.
Reserved instance meaning in Kubernetes
A reservation covers the VMs under your AKS or EKS nodes, not pods.
Say you reserve 3 VMs for a node pool of 3. Later it shrinks to 2. With no other matching VM, you still pay for the third.
Why it matters for your bill
- Reservations apply hour by hour, so Microsoft says to buy for your steady base usage.
- Reserve more, and you pay for hours no VM uses.
- Coral rebalances CPU and memory requests on AKS and EKS to match real use. It drains spare nodes so your autoscaler can remove them.
- Reserve only for the nodes you still need after you reduce your costs.
- The free assessment works out your own figure.
Read next: How to reduce cloud costs: what moves the bill
Sources: AWS, “Reserved Instances for Amazon EC2 overview” (opens in a new tab); AWS, “Amazon EC2 Reserved Instances” (opens in a new tab); Microsoft Learn, “What are Azure Reservations?” (opens in a new tab); Microsoft Learn, “Understand Azure Reserved VM Instances discount” (opens in a new tab).