A media company's finance team notices that the unit price it pays AWS for storage and compute has dropped several times since it moved, without any new contract being negotiated. The team wants the business reason for this explained in its quarterly report.
Which advantage of cloud computing best explains the lower prices?
Choose one answer.
AA. Trading fixed expense for variable expense, so the company pays for IT as it uses it
BB. Going global in minutes, so applications can be deployed in many Regions quickly
CC. Benefiting from economies of scale, because usage from many customers is combined
DD. Stopping guessing about capacity, so resources scale up and down with demand
Show the answer and explanation
Answer: C
A. Wrong: Trading fixed expense for variable expense describes how the company pays: per unit of use instead of large upfront purchases. It explains the structure of the spending, not why AWS unit prices fall over time.
B. Wrong: Going global in minutes means an application can be deployed in several Regions worldwide with a few clicks. It helps with latency and reach, but it does not explain why the price per unit falls.
C. Right: Correct. AWS combines usage from very large numbers of customers, which lets it offer pay-as-you-go prices lower than a single company could reach alone. Those savings are passed on as prices fall. Learn more: Six advantages of cloud computing (opens in a new tab)
D. Wrong: Stopping guessing about capacity means the company matches resources to demand instead of forecasting peaks. That avoids idle or constrained capacity, but it does not lower the price AWS charges per unit.
Explanation
Economies of scale explain the lower prices. AWS aggregates usage from very large numbers of customers and passes the savings on through lower pay-as-you-go prices. The other advantages are real, but none of them explains why the price of a unit falls over time.
Want more on Benefits of the AWS Cloud? The 5 full-length practice sets have 14 more Benefits of the AWS Cloud questions, 325 in all, none of them in the free exam. One payment of $14.99, no subscription. See the practice sets →