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How It Works
When a cloud account uses a mix of on-demand instances and commitment-based discounts such as Reserved Instances or Savings Plans, the provider calculates a single average rate across all usage hours. This average is the blended rate. For example, if half your EC2 hours run at the full on-demand price and the other half run at a discounted Reserved Instance rate, the blended rate falls somewhere between the two. AWS surfaces blended rates in the Cost and Usage Report (CUR) when linked accounts share commitments purchased at the management account level. Azure and GCP apply similar averaging logic when reserved capacity and on-demand usage coexist within a billing scope.
Why It Matters for Cloud Cost
Blended rates can obscure the true cost of individual workloads. A team running all on-demand resources may appear to benefit from discounts they did not actually consume, while the team holding the commitments looks more expensive than it is. This makes accurate chargebacks and showback reporting difficult. Finance teams relying on blended rates for internal cost allocation risk making optimization decisions based on averaged figures rather than actual per-resource prices. Unblended cost and effective rate metrics exist precisely because blended rates are a poor basis for granular cost accountability.
ClearCost, Usage AI’s visibility and showback reporting layer, supports multi-org cost visibility and showback reporting across accounts.