CLF-C02 Question 5
Single answerA startup company is considering migrating their on-premises infrastructure to AWS. They are concerned about costs and want to understand how AWS can help them reduce expenses through economies of scale. Which of the following best highlights how AWS achieves cost savings for customers through economies of scale?
- A
AWS aggregates usage from millions of customers, enabling lower infrastructure costs.
- B
AWS offers discounts only to customers with annual contracts and large upfront payments.
- C
AWS provides customers with dedicated physical servers to reduce costs.
- D
AWS allows customers to use resources on a pay-as-you-go model, ensuring they only pay for what they use.
Show answer and explanation
Correct answer: A
Explanation
Economies of scale refer to cost advantages that AWS achieves by operating at a large scale. By aggregating demand from millions of users, AWS can negotiate reduced costs for infrastructure components such as hardware and power, and these savings are passed on to customers in the form of competitive pricing. This is a key benefit of using AWS compared to maintaining on-premises infrastructure.
- A. Correct.
Correct. AWS achieves economies of scale by operating at a massive scale, aggregating usage across millions of customers, which allows it to negotiate lower costs for hardware, power, and bandwidth. These savings are passed on to customers.
- B. Incorrect.
Incorrect. While AWS does offer Reserved Instances and Savings Plans with discounts for longer commitments, it does not limit cost savings to annual contracts or upfront payments.
- C. Incorrect.
Incorrect. Dedicated physical servers are typically more expensive and are not a method AWS uses to achieve economies of scale.
- D. Incorrect.
Incorrect. While pay-as-you-go is an important AWS pricing model, it is not directly related to economies of scale.