Optimizing AWS Costs: Reserved Instances and Savings Plans
As a Cloud Solutions Architect, understanding how to manage and optimize costs is as crucial as designing for functionality and performance. AWS Reserved Instances (RIs) and Savings Plans offer significant cost savings for predictable workloads by committing to a certain level of usage in exchange for a lower price compared to On-Demand instances.
Understanding Reserved Instances (RIs)
Reserved Instances are a billing discount applied to EC2 instances that match specific attributes. When you purchase an RI, you commit to using a specific instance configuration (e.g., instance type, region, operating system) for a 1-year or 3-year term. In return, you receive a substantial discount on the On-Demand price.
RIs offer significant discounts for committed usage.
There are three types of RIs: Standard RIs, Convertible RIs, and Scheduled RIs. Standard RIs offer the largest discounts but are less flexible, while Convertible RIs allow you to change instance attributes.
Standard RIs provide the most significant discounts but require a commitment to a specific instance family, region, OS, and tenancy. Convertible RIs offer more flexibility, allowing you to change instance attributes like instance type, OS, or tenancy during the term, albeit with a slightly lower discount. Scheduled RIs are designed for workloads that run on a specific, recurring schedule, allowing you to reserve capacity for those times.
Significant cost savings compared to On-Demand instances.
Understanding Savings Plans
Savings Plans are a more flexible pricing model that offers lower prices on AWS compute usage in exchange for a commitment to a consistent amount of usage, measured in USD per hour, over a 1-year or 3-year term. They are designed to be simpler and more flexible than RIs.
| Feature | Reserved Instances (RIs) | Savings Plans |
|---|---|---|
| Commitment Basis | Specific instance attributes (type, region, OS, tenancy) | Consistent usage amount ($/hour) across compute services |
| Flexibility | Lower for Standard RIs, higher for Convertible RIs | High; applies across EC2, Fargate, Lambda, and other compute services |
| Discount Level | Can be higher for specific, well-matched commitments | Generally competitive and consistent |
| Management | Requires careful matching of instance attributes | Simpler; automatically applies to eligible usage |
There are two types of Savings Plans: Compute Savings Plans and EC2 Instance Savings Plans. Compute Savings Plans offer the broadest flexibility, applying to EC2, AWS Fargate, and AWS Lambda usage. EC2 Instance Savings Plans are specific to EC2 instances and offer a discount that is applied to the instance family and region.
Imagine your AWS bill as a pie. On-Demand instances are like buying individual slices at full price. Reserved Instances are like pre-ordering a specific type of slice (e.g., a large pepperoni slice) for a year, getting a discount for that commitment. Savings Plans are like committing to buy a certain dollar amount of pizza per hour for a year, and AWS automatically gives you the best deal on whatever slices you choose (EC2, Lambda, Fargate) to meet that commitment.
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Choosing the Right Option
The choice between RIs and Savings Plans depends on your workload's predictability and your need for flexibility. If you have very stable, predictable workloads that rarely change instance types or regions, Standard RIs can offer the deepest discounts. For more dynamic environments or if you use a mix of EC2, Lambda, and Fargate, Compute Savings Plans provide greater flexibility and broader applicability.
AWS Cost Explorer is an invaluable tool for analyzing your current spending and identifying opportunities for RI and Savings Plan purchases. It can recommend specific plans based on your historical usage.
When evaluating, consider your utilization rates. Purchasing RIs or Savings Plans for underutilized resources can negate the savings. It's often best to start with your most stable and predictable workloads and gradually expand your commitments as you gain confidence in your usage patterns.
AWS Cost Explorer
Learning Resources
Official AWS documentation detailing Savings Plans, their types, benefits, and how they work.
Comprehensive guide from AWS on Reserved Instances, including different types and purchase options.
Learn how to visualize, understand, and manage your AWS costs and usage with AWS Cost Explorer.
An announcement blog post detailing the introduction of Savings Plans and comparing them to Reserved Instances.
AWS guidance on various cost optimization strategies, including the use of RIs and Savings Plans.
A deep dive into Compute Savings Plans and how they can be leveraged for maximum savings.
Details on EC2 Instance Savings Plans, a more specific type of Savings Plan for EC2 users.
A whitepaper covering best practices for managing AWS costs, including commitment-based discounts.
Frequently asked questions about AWS Savings Plans, addressing common queries and clarifications.
Information about the AWS Marketplace where you can buy and sell Reserved Instances.