EC2

What is spot instance : 

The key to understanding spot instances is to look at the way that cloud service providers such as Amazon Web Services (AWS) operate. Cloud service providers invest in hardware resources and then release those resources (often on a per-hour basis) to subscribers. One of the problems with this business model, however, is that at any given time, there are likely to be compute resources that are not being utilized. These resources represent hardware capacity that AWS has paid for but are sitting idle, and not making AWS any money at the moment.

Rather than allowing these computing resources to go to waste, AWS offers them at a substantially discounted rate, with the understanding that if someone needs those resources for running a normal EC2 instance, that instance will take priority over spot instances that are using the hardware resources at a discounted rate. In fact, spot instances will be stopped if the resources are needed elsewhere.


On-demand instance are fixed rate per hour defined by AWS