Amazon Cloud Computing Question:

On demand instance allow user to pay for the computing capacity according to their use every hour, whereas reserved instances provide user to pay for every instance which they use and they want to reserve.

On demand instance provide user a free working environment in which there is no need for too much of planning related to complexities, whereas reserved instances provide user with discounts on the hourly charge of an instance and provide a easy way to manage the instances as well.

On demand instance provide maintenance of hardware and transforms fixed cost into much smaller variable costs, whereas reserved instance provide easy way to balance the pay package.