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I think OP means Amazon’s discount on AWS.

Many customers on AWS have contracts that guarantee discounted rates given sufficient volume. People have commented on hn about negotiating them, and you can see some examples from recent IPO filings. Amazon (the non-AWS parts) are yet another customer of AWS, and wherever possible you should expect them to operate like one. They even buy RIs!

Thanks - yes that's exactly what I meant

Oops, thanks for clarifying.

I think OP was asking if Amazon is calculating their savings based on the public AWS service pricing or their own cost for running on those AWS services (there's obviously a good chunk of margin on what it costs to run AWS and what the listed service prices are for those services).

He was referring to RDS list price.