In cloud computing, particularly in Amazon Web Services (AWS), Spot Instances are a pricing model that allows you to use spare compute capacity at a significant discount compared to on-demand pricing.

• Spot Instances can offer cost savings of up to 90% compared to on-demand pricing.
• They are ideal for workloads with flexible start and end times, or that can withstand interruptions.

Spot Instances work by allowing you to bid on unused EC2 capacity.

• When your bid exceeds the current Spot price, your request is fulfilled and your instances will run until either you choose to terminate them or the Spot price exceeds your bid.
• Spot Instances are often used for data analysis, batch jobs, background processing, and optional tasks.

A data analysis company, DataAnalytica, has a large job that isn't time-sensitive. Instead of using on-demand instances, which can be expensive, DataAnalytica uses Spot Instances. They bid on the spare capacity and run their job at a much lower cost.