Oops, my "big unknown" can't happen (they don't charge for partial hour if your instance gets terminated by them). The original article still seems wrong when it says "So there is a balance between more instances at a lower price and fewer instances at a higher price." I think this is designed so that all boxes will always be running (assuming there are lots of people willing to pay 1 cent). The way I see it: The spot price is the current lowest bidder running. If you bid above the spot price you will take over one of those lowest bidder boxes (but still pay the spot price, not your bid). If someone takes over the last "lowest bidder" box at the spot price, then the spot price goes up (and everyone pays higher rates).