Least Cost for Hosting a Database Server

Answer - D.

If the database is going to be used for a minimum of one year at least, it is better to get Reserved Instances.

You can save on costs if you use partial upfront options.

For more information on AWS Reserved Instances, please visit the Link:

https://aws.amazon.com/ec2/pricing/reserved-instances/

A is incorrect.

Spot instances can be terminated with fluctuations in market prices.

Unless the question specifies a use case where high availability is not a requirement, this cannot be assumed.

B is incorrect.

On-Demand is not the most cost-efficient solution.

C is incorrect.

No upfront payment is required.

However, it's a costlier option than Partial/All upfront payment.

For more information on the Reserved Instances Payment option, please check below AWS Docs:

https://docs.aws.amazon.com/aws-technical-content/latest/cost-optimization-reservation-models/reserved-instance-payment-options.html

Note:

Reserved Instances do not renew automatically.

When they expire, you can continue using the EC2 instance without interruption.

But you are charged On-Demand rates.

In the above example, when the Reserved Instances that cover the T2 and C4 instances expire, you go back to paying the On-Demand rates until you terminate the instances or purchase new Reserved Instances that match the instance attributes.

https://docs.aws.amazon.com/AWSEC2/latest/UserGuide/ec2-reserved-instances.html

To host a database server for a minimum period of one year, the least cost-effective option would be to choose a Reserved Instance (RI) plan. Reserved Instances allow customers to reserve capacity for a one or three-year term, providing a significant discount over the On-Demand price.

The pricing options for Reserved Instances include No Upfront, Partial Upfront, and All Upfront. With the No Upfront option, you pay nothing upfront but commit to paying for the instance over the term of the reservation. With the Partial Upfront option, you pay a portion of the cost upfront and commit to paying for the instance over the term of the reservation. With the All Upfront option, you pay the full amount upfront and receive the maximum discount.

Choosing a No Upfront cost Reserved Instance would result in the least cost, as it requires no upfront payment, and the discount is applied over the term of the reservation. However, this option may result in slightly higher hourly rates compared to the Partial or All Upfront options.

Spot Instances are instances that are available at a significant discount compared to On-Demand prices but can be terminated by AWS with little notice when demand exceeds supply. Spot Instances can be a cost-effective option for short-term workloads, but they are not recommended for workloads that need to be available for extended periods.

On-Demand instances are instances that you pay for by the hour with no upfront cost or long-term commitment. While they provide maximum flexibility, On-Demand instances are the most expensive pricing option and are not recommended for long-term workloads.

In summary, the best option for hosting a database server for a minimum period of one year is to choose a No Upfront cost Reserved Instance. This option provides the greatest cost savings over the one-year term while requiring no upfront payment.