A virtual machine costs ¥50 per hour on demand, paying only for the hours used, or ¥262,800 per year with a reservation that commits to a year of use in advance, regardless of the hours used (both made-up prices). With a year taken as 8,760 hours, the reservation becomes cheaper once the hours used in a year exceed a certain number. Which of the following is that number of hours?

Answer: B. 5,256 hours (60% of the year)

The reservation costs ¥262,800 regardless of the hours used, and on demand costs ¥50 × hours used, so the two are equal at 262,800 ÷ 50 = 5,256 hours. This is 5,256 ÷ 8,760 = 60%, so if the machine is used for more than 60% of the year, the reservation is cheaper. Converted to an hourly rate, the reservation is 262,800 ÷ 8,760 = ¥30, which is 40% cheaper than on demand. A common approach is to reserve servers that always run and use on demand for the extra capacity added to match the load.

• A. This confuses the reservation's discount rate (¥30 is 40% cheaper than ¥50) with the share of hours used.
• B. Correct. 262,800 ÷ 50 = 5,256 hours, 60% of the year.
• C. The reservation does not need year-round use to pay off. Above 5,256 hours, the reservation is cheaper.