Which term describes a reduction in the current month's cost by avoiding charges?

Which term describes a reduction in the current month's cost by avoiding charges?

• A. Cost Avoidance
• B. On-Demand Rate
• C. Reservation Waste
• D. Savings Realized

Answer: (A)

Cost avoidance is about reducing current month costs by preventing charges before they occur. It happens when you take actions that stop resources from accruing usage charges—like shutting down idle instances, rightsizing workloads, or choosing cheaper configurations before the invoice is generated. Since the expense is not incurred, the bill for the month is lower. This differs from savings realized, which are actual reductions after the fact through committed-use discounts or post-bill adjustments. An on-demand rate describes the pricing model itself, not an action to cut costs. Reservation waste refers to paying for reserved capacity that isn’t used, which increases costs rather than reducing them. So the term that best fits the description is cost avoidance.

Cost avoidance is about reducing current month costs by preventing charges before they occur. It happens when you take actions that stop resources from accruing usage charges—like shutting down idle instances, rightsizing workloads, or choosing cheaper configurations before the invoice is generated. Since the expense is not incurred, the bill for the month is lower. This differs from savings realized, which are actual reductions after the fact through committed-use discounts or post-bill adjustments. An on-demand rate describes the pricing model itself, not an action to cut costs. Reservation waste refers to paying for reserved capacity that isn’t used, which increases costs rather than reducing them. So the term that best fits the description is cost avoidance.