Comment by bitpush

The way they work, you get a preferred price for various services at a substantial discount to list rate, but you commit to a guaranteed spend level for that period. The guaranteed spend is typically account-wide, but you have to pay a true-up at the end of the period if you fail to hit it.

It's a bit of calculus: will your growth increase enough such that, especially with the discount, you'll reach the minimum?

You can see these agreements littering 10-Qs, or similar, like when Snapchat filed their S-1 and revealed:

>When Snap originally filed for its IPO in 2017, it revealed a massive $2 billion commitment over five years ($400 million annually) with Google Cloud.

Yes; larger discounts with more commits, you also get some price guarantees on SKUs quite valuable these days and other benefits - like say premium support, architecture guidance, access to product teams and so forth.

Self-service retail buyers of cloud have access to some of these price advantages as well, 1-3 Year reservations(even paid monthly) are 40% cheaper of the bat after all. PAYG with fluctuating usage is quite more expensive than committed consumption for cloud.