Author: Steve Upkin

Amazon Web Services is truly a globally renowned cloud computing and storage provider. The company leads the cloud computing service industry with well over 41% of the global cloud computing and storage market share, according to Statista.com. 

According to figures and statistics from RapidValue.com, Amazon Web Services has well over 1 million active enterprise users. AWS offers its impressive cloud computing as a web-based service to its million+ users across 190 countries. The huge AWS cloud network consists of over 70 infrastructure services, more than 8,000 partner network members and 1,900+ third-party software products.

The immense popularity of AWS can be easily gauged when you consider that, AWS deploys 5 times more cloud infrastructure than its next 14 competitors combined. Daily, AWS adds the same number of new cloud infrastructures which it used to run 7 years ago. AWS has offered price discounts more than 60 times since it launched. On average, 1 out of 3 people who browse the internet end up at a website powered by AWS. 

AWS’ EC2 Reserved Instance (RI) remained one of the most popular service plans for users but it has been overshadowed by the newer AWS Savings Plan.

Why avoid AWS Reserved Instances?

Now that you know the immense size of web-based cloud computing services provided by AWS, it’s time to take a look at which type of service plan will be best suited for you. 

Amazon’s Savings Plan is a discounted pricing plan for Fargate and EC2 environments. Many experts believe the AWS Reserved Instance (RI) price discount model to be too complicated and often become a disadvantage too. 

So, what is wrong with the AWS Reserved Instance model?

First off, reserved instances lack flexibility and users are required to commit to a specific instance for 1 or 3 years. As cloud computing is all about flexibility and efficiency it should provide users with numerous services and give the users the choice to turn the services on and off, as and when they need so that they are charged only for what they use. Although AWS allows users to resell unneeded RIs on the Reserved Instance Marketplace, as well as change the specifications of the instance, including its Availability Zone, the networking type and instance size. However, although these services are provided at a discounted rate, purchasing and managing RIs is extremely complex. 

Why AWS Savings Plan is better than AWS Reserved Instances (RIs)?

Enterprise Discount Programs, known as EDP in short, are service subscription plans that provide enterprises a considerable discount. 

The AWS Savings Plan is incredibly more efficient and cost-effective because it lets enterprises to get the most of the simplicity of the On-Demand pricing model while also providing the benefits associated with reserved instances (RIs) and EDP. 

AWS offers its new Savings Plan through two types – Computer Savings Plans and EC2 Instance Savings Plans. 

AWS Compute Savings Plan

Compute Savings Plan is applicable automatically, irrespective of the region, tenancy, family, size of the instance, etc. This plan is available for users under a one-year term and a three-year term plan. Compute Savings Plan is useful for Fargate and EC2 instances. It is considered as a hybrid between the AWS Enterprise Discount Program (EDP) and the popular Reserved Instances (RIs) discounted pricing model. 

In simple words, users can commit to a predetermined amount of computing usage over the next 1 or 3 years to avail of heavily discounted rates for cloud computing web-based services. Unlike for Reserved Instances, under the Compute Savings Plan, the user does not have to commit to rigid services, including type or family of instance. 

Highlights of AWS Compute Savings Plans:

• Very flexible 
• Up to 60% off on hourly rates
• Allows changing family, region, size, tenancy, AZ or OS
• Applicable to EC2 and Fargate instances

AWS EC2 Savings Plan

The AWS EC2 Savings Plan restricts users to the same instance family in the same region. This plan is also available under a one-year or three-year term plan. 

In other words, the AWS EC2 Savings Plans are very similar to the conventional Reserved Instance (RI) pricing models as it requires users to commit to a single type of instance family and AWS Region for the entire duration of the term plan. The only difference between AWS EC2 Savings Plan and Reserved Instance (RI) pricing model is that EC2 Savings Plan allows users to change the Instance Type but within the same family. 

Highlights of AWS EC2 Savings Plans:

• Lower rate but less flexibility 
• Can change usage within the same region and instance family 
• Requires committing to a single instance family in the same region

Conclusion

As AWS Savings Plan offers the incredible flexibility synonymous with cloud computing in a significantly efficient manner, it makes the Savings Plan more feasible and better than the AWS Reserved Instance pricing model. 

AWS reserved instance pricing simplified

Amazon Web Services (AWS) is the top provider of cloud-based web services around the world. According to reports, there are well over 1 million active enterprise customers spread across 190 countries where AWS provides its server-based storage and computing services. AWS has collaborated with over 8,000 members in its partner network and offers an extensive range of over 1,900 3rd party software products to ensure optimal server services. 

AWS has strategically placed server banks spread across more than 18 locations in 52 Availability Zones around the globe, which has successfully helped over 54,000 database migration processes till date. On an average, AWS helps run over 70 million hours of software tests per month. These incredible achievements have enabled AWS to capture a lion’s share of the market with 31% market penetration. 

What are AWS Reserved Instances?

AWS provides an extensively scalable computing capacity through its Elastic Compute Cloud (EC2) within its web-based services. The AWS EC2 helps users avoid investing significant amount of capital to create and configure an in-house IT base.

AWS EC2 is designed specifically for users to develop and deploy applications quicker and with increased efficiency. AWS EC2 computing environment is extremely flexible as it allows users to launch as many virtual servers required, along with extensive storage management, configuring security levels and specifying network settings. The incredible flexibility of AWS EC2 lets users scale up and scale down their computing requirements on the virtual servers in real-time. This is an excellent way to not worry about predicting traffic for your future needs. 

What is AWS EC2 Instance?

Instances are the virtual computing environment created by AWS cloud servers for users to develop and test their applications quickly and more efficiently. 

Some of the top features that make AWS EC2 a more preferable choice for users are:

• Preconfigured templates – These are designed for instances and are known as AMIs, short for Amazon Machine Images. This is an excellent way to choose the type of operating system (OS) and additional software that suit your particular requirements. 
• Instance types – These are different combinations of varied memory, storage, CPU and networking capacity that you can select as per your needs. 
• Key pairs – This helps to secure log-in information for your instances. The public key is stored by AWS while the private key is held by the user at a secure location. 
• Instance store volumes – These are storage volumes meant for temporary data which is deleted when the user stops, terminates or puts an instance on hibernation. 
• Regions / Availability Zones – AWS stores data and creates virtual servers at these multiple secure locations spread across the globe.

Important Bits about AWS Reserved Instance Pricing

Amazon Web Services (AWS) EC2 Reserved Instances (RIs) are designed to provide users with a reserved virtual storage and computing capacity, when used within specified Availability Zones. The AWS EC2 RIs offer a discount of as much as 72% off, as compared to the On-Demand instance pricing for similar configuration. 

Amazon EC2 RIs have three major advantages for users:

1. Reserved Storage/Computing Capacity – Reserved Instances (RIs) provide a capacity reservation. It allows users to launch any number of reserved instances whenever required. 
2. Flexibility – AWS EC2 RIs also incredibly flexible and allow users to choose and change the type of family, tenancy and operating system (OS) at a significantly less price (with regard to the same configuration in On-Demand pricing model).
3. Save money – AWS EC2 RIs are available at a highly reduced rate, with as much as 72% off as compared to On-Demand pricing model for the same configuration. 

Are there different types of AWS EC2 RIs?

Yes, there are three types of AWS EC2 RIs available for users. These include:

• Standard RIs – Standard Reserved Instances (RIs) offer the largest discount (as much as 72% off) when compared to the same configuration within On-Demand pricing model. These are specifically designed for steady-state use. 
• Convertible RIs – Convertible Reserved Instances (RIs) provide a lesser discount (up to 54% off). It also allows users to modify the attributes of the RIs if the change results in developing an RI which has a value equal to/greater than the original Reserved Instance. 
• Scheduled RIs – Scheduled RIs are made to be deployed within the period of time it has been reserved for. With Scheduled RIs, users can easily match their capacity reservation according to a predictable repeating schedule which needs only a fraction of a day, week or month. 

Conclusion

Amazon Web Services’ EC2 RIs are best-suited for small enterprises and startups who do not wish to invest a large capital into creating and maintaining an in-house IT infrastructure. AWS EC RIs are incredibly effective for cheaper and faster application testing using advanced cloud computing and storage technology from Amazon. 

AWS EC2 Convertible RIs

Amazon Web Services, also known as AWS short, has been offering cloud servers through web services since 2006, making it the leading and most popular cloud computing platform.

According to statistics by BleylDev at Medium.com, AWS reportedly occupied the lion’s share of the industry with a 31% market share in mid-2020 and continues to hold this share to date. There are over 700,500 companies worldwide using AWS cloud services. In addition, the cloud computing market is predicted to grow to an astounding US$ 600 billion by 2023. As of today, over 94% of companies use cloud-based computing and storage services in one form or another.

How AWS Helps?

Cloud server companies have achieved these incredible feats, and Amazon Web Services in particular, by the immense and varied benefits of cutting-edge cloud technology. Cloud computing helps avoid the enormous cost of building an in-house IT infrastructure by providing a cost-effective and scalable cloud-based computing platform. Cloud technology is an excellent, low-cost alternative for startups and other enterprises who wish to avoid the high cost of buying servers and creating their own IT setup.

AWS today offers its incredibly low-cost but powerful cloud computing services to businesses in 190 countries worldwide. Amazon Web Service has a pan-global server network with data centers located at strategic places around the world, such as Australia, Japan, Singapore, Europe, Brazil, the US, etc.

To avail of these amazing cloud-computing services, users need only sign up for AWS, watch a short 10-minute video to learn how to use the services and you can easily launch a WordPress website on AWS. The services also offer sample applications, technical documentation and developer tools that help to launch and manage applications on cloud resources.

Benefits of AWS Reserved Instances

Reserved Instances (RIs) are a means of getting a discounted rate (reduction of as much as 72%) in your AWS invoice. As compared to the On-Demand pricing model, the RI model offers a greater discount and even provides a capacity reservation in particular Availability Zones.

As AWS EC2 RIs offer the option to reserve capacity for computing, your ability to launch the reserved instances promptly increases and becomes more efficient.

In addition, the AWS EC2 RIs also offer incredible flexibility when it comes to switching from one family, tenancy or OS type to another. This flexible service also comes with an additional discount when used as Convertible RIs.

However, the leading benefit of the AWS EC2 Reserved Instance pricing model is the ability to save as much as 72% when compared to the same requirements in the On-Demand pricing model. This discount is provided on the hourly rate a user is normally charged for AWS EC2 instances. At the time of billing, the RI’s discounted rate is automatically taken into consideration when the user’s EC2 instance properties match the properties of an active, reserved instance.

New AWS EC2 RI Payment Model

There are basically two benefits that the AWS EC2 Reserved Instances model provides – assurance of flexible capacity and reduced hourly rate. These benefits can be gained with an upfront payment. Amazon Web Services has simplified its RI payment model even further.

The new Reserved Instance (RI) payment model offers a single type of reserved instance but with three different payment options. The capacity assurance and heavily discounted hourly rates (as much as 63% lower as compared to On-Demand pricing rates) are offered with all three payment options under the 3-year term plan.

These are three payment options that offer incredible discounts and capacity assurance when you use AWS EC2 RIs:

1. All Upfront – This payment option requires users to pay the cost of the entire Reserved Instance term ( 1 or 3 years) in advance and get the best-discounted rates, as compared to On-Demand pricing.
2. Partial Upfront – The AWS partial upfront payment plan requires users to pay a portion of the Reserved Instance in advance. The remaining payment is paid in installments over the course of the term plan (1 or 3 years). Users can spread their expenses between the advanced payment and the hourly rates using the AWS partial upfront payment method.
3. No Upfront – Under this AWS EC2 RI payment plan, users are not required to make payments in advance. However, users must commit to making the payment over the 1-year term plan this payment model offers. In turn, AWS provides a discounted hourly rate (as much as 30% less) as compared to the On-Demand pricing model.

Conclusion

AWS EC2 RI services offer incredible flexibility at a heavily discounted hourly rate. You can choose the AWS partial upfront payment plan in case your budget allows for partial advance payment with the remaining charges paid throughout the term plan and offers all these services at a comparatively low price.

See Also

AWS no upfront reserved instance

Amazon is one of the largest and most popular cloud-based computing and storage service providers around the world. Amazon Web Services (AWS) offers an incredible range of advanced and efficient virtual servers and processors for optimal and valuable data processing and storage. The Amazon EC2 is one such excellent web service by Amazon.

Amazon EC2, short for Elastic Compute Cloud, is an internet-based service that offers a secure and flexible computing and storage facility for enterprise data. It makes web-scale cloud computing effortless for developers. The EC2 has an easy-to-use web interface that allows users to resize and redesign their computing needs according to the current requirement. Amazon EC2 is designed to provide users with complete control over computing resources and provides Amazon’s amazing computing environment for faster and more efficient development.

Amazon EC2 has a wide range of computing resources, storage space, processors, networking, purchase models and operating systems to offer, including the only 400 Gbps Ethernet network. The Amazon EC2 also packs an incredibly powerful GPU instance for machine learning training and processing graphics.

What are Amazon Reserved Instances (RIs)?

AWS offers its EC2 server solutions designed for different types of instances. Amazon allows users to select the level of networking capacity, storage, memory and CPU power they require to run their applications.

As compared to its On-Demand pricing model, the Amazon EC2 Reserved Instance (RI) offers a discount of up to 72%, apart from providing reservation capabilities when used in a particular Availability Zone.

Are there different types of EC2 Reserved Instances (RIs)?

Yes, there are basically three different types of reserved instances (RIs) offered by AWS EC2 services. You can make your choice for the best-suited RI according to your application requirements from the options given below:

• Standard Reserved Instances (RIs) – Standard RIs are provided at the most reduced rates (as much as 72%) when purchased under an On-Demand payment model. These are ideal for steady-state use.
• Convertible Reserved Instances (RIs) – Convertible RIs are offered at a lesser discounted rate (up to 54% under the On-Demand model) and provide the capacity to change the attributes of the RI. This is possible as long as it results in creating RIs of greater or equal value. These are also ideal for steady-state use.
• Scheduled Reserved Instances (RIs) – Scheduled RIs are designed for launch within a specific reserved time period and are best suited to match your reservation capacity, especially with a predictable recurring schedule.

What are the benefits of Amazon Reserved Instances?

There are several reasons that make the Amazon EC2 RI a more popular and sought-after instance type among AWS users. The top two benefits that make the Amazon EC2 RI incredibly efficient are:

Discounted Rates

AWS RIs provide an extensive discount (as much as 72%) as compared to the Amazon On-Demand instance pricing model. In addition, it provides complete freedom for users to switch their instance families, tenancies and OS types. This is especially beneficial when you use Convertible RIs for RI pricing.

Reserve Capacity

RIs come with reserved capacity and thus provide extra efficiency and security for launching instances whenever required.

EC2 RIs are billed at a rebated hourly rate. In addition, they provide the option to reserve capacity for EC2 instances too. At the time of invoicing, the AWS Billing section automatically cuts down the rates to the discounted price when the properties of active RI and EC2 instance usage are similar.

Reserved Instance (RI) Payment Option

Amazon EC2 reserved instances are available for purchase over the AWS Management Console. You can choose from the following three payment options for reserved instances:

1. No Upfront Reserved Instance – Under this payment model, there is no upfront payment needed. Users are billed at a reduced hourly rate for each hour within the plan term. This is regardless of the fact if the RI is being used or not. Users are under a contract to make monthly payments for the entire term of reservation, under the No Upfront Reserved Instance payment model. To buy the No Upfront Reserved Instance payment option, you will need to provide a successful billing history with AWS.
2. Partial Upfront – In this payment plan, the user is required to pay a partial amount upfront while the remaining hours within the term plan are billed at a reduced hourly rate. The billing is done regardless of whether the Reserved Instance is used or not.
3. All Upfront – Under this payment plan, the user is expected to make the complete payment for the full term at the beginning. However, under this plan, no additional hours and extra costs are billed, regardless of the total hours they are used.

No Upfront reserved instances are ideal for users who cannot determine or even estimate the number of computing hours required for the upcoming term.

See Also

AWS Billing and Cost Management