Amazon Web Services (AWS) Elastic Compute Cloud (EC2) is a popular cloud computing service that allows users to rent virtual computing resources as needed. One of the key advantages of using EC2 is its flexibility in terms of computing resources, as users can quickly start and stop instances, choose from a wide range of instance types, and scale resources up or down as needed. However, with various EC2 purchase options available, including On-Demand, Reserved Instances, Spot Instances, Savings Plans, Capacity Reservations, and Dedicated Hosts, it can be challenging to determine the most cost-effective and practical choice for your business needs. In this comparison, we will break down each purchase option in terms of payment, contract length, billing granularity, usage flexibility, pricing model, ideal use cases, and more to help you make an informed decision about the best EC2 option for your specific use case.
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Reserved Instances
There are three types of Reserved Instances (RIs) available on AWS EC2:
Standard RIs: These offer the highest savings (up to 75%) and require an upfront payment. Standard RIs are best suited for workloads with steady-state usage over a long period, and the contract term can be either 1 or 3 years.
Convertible RIs: These offer a lower level of savings (up to 54%) compared to standard RIs, but they provide more flexibility. Convertible RIs allow you to change instance types or even the operating system of your instance family during the contract term. The contract term for convertible RIs can be either 1 or 3 years.
Scheduled RIs: These are available to launch within the time window you reserve, making them a good option for workloads with predictable capacity needs. Scheduled RIs offer the lowest level of savings (up to 5%), but they can help to reduce costs for specific workloads that have known capacity requirements. The contract term for scheduled RIs can be 1 year.
Reserved Instances (RIs) offer two payment options:
All Upfront: With this payment option, you pay for the entire RI term (1 or 3 years) upfront, and you receive the highest level of savings. This option can be a good choice if you have the necessary funds and want to reduce your long-term costs as much as possible.
Partial Upfront: With this payment option, you make a partial upfront payment for the RI term (usually around 50-60% of the total cost), and you pay the remaining balance in monthly installments over the course of the contract term. This option can be a good choice if you want to reduce your upfront costs while still receiving a significant discount.
The payment option you choose can have an impact on the level of savings you receive. All Upfront RIs offer the highest level of savings, but they require a significant upfront investment. Partial Upfront RIs offer lower savings but can be a good choice if you don't have the funds to make an upfront payment.
It's important to note that once you choose a payment option, you cannot change it for the duration of the RI term. Therefore, it's important to carefully consider your financial situation and usage needs when choosing a payment option.
When purchasing Reserved Instances (RIs) on AWS, there are several attributes that you must specify, including:
Instance Type: The type of EC2 instance that you want to reserve. This determines the underlying hardware that your instance will run on.
Region: The AWS region where you want to reserve the capacity.
Term: The term length of the reservation, either 1 or 3 years.
Payment Option: The payment option you want to use (All Upfront, Partial Upfront, or No Upfront).
Offering Class: The offering class you want to reserve, either Standard or Convertible. Convertible RIs offer more flexibility to change instance types or regions during the reservation term, but they also have slightly lower discounts than Standard RIs.
Quantity: The number of instances that you want to reserve.
By specifying these attributes, you can reserve EC2 capacity in advance and receive a discount on your hourly usage rates. It's important to carefully consider your usage needs and financial situation when purchasing RIs, as they require an upfront commitment and cannot be changed once purchased (unless you have chosen a convertible offering class)
Savings Plan:
Savings Plans offer a flexible pricing model for Amazon EC2, Fargate, and Lambda services. With Savings Plans, you commit to a specific dollar amount per hour, month, or year in exchange for a discounted rate on your usage. The commitment term can be either 1 or 3 years, and the discount can be up to 72% off the On-Demand price.
The main advantage of Savings Plans is their flexibility. Unlike Reserved Instances, Savings Plans are not tied to specific instance types, families, or operating systems. Instead, they apply to all users in a specific AWS region, regardless of the instance type or family. This means you can use Savings Plans to save money on any eligible usage, even if your usage changes over time.
Additionally, Savings Plans are not limited to a specific usage per year as long as the total usage is equal to or less than the committed amount. This means that you can use Savings Plans to cover unexpected spikes in usage or to scale up your usage over time.
Overall, the flexibility of Savings Plans makes them a good choice for customers with dynamic workloads or those who want to avoid the upfront commitment required by Reserved Instances. However, it's important to note that, unlike Reserved Instances, Savings Plans do not provide capacity reservations, which may be a consideration for specific workloads.
Capacity Reservations
The customer is billed for the capacity reservation even if instances are not launched or fully utilized. Capacity Reservations allow you to reserve capacity for EC2 instances in a specific Availability Zone for any duration, up to 3 years.
When you create a Capacity Reservation, you pay for the capacity regardless of whether you launch instances into the reservation. This means that you must carefully plan your usage to ensure that you are fully utilizing the reserved capacity.
Capacity Reservations can be a good choice for customers who have workloads with specific capacity needs or who require a dedicated infrastructure to meet regulatory or compliance requirements. However, it's important to ensure that the reservation capacity matches your workload's capacity requirements and that you are prepared to pay for the unused capacity.
Summary
Choosing the right AWS EC2 purchase option depends on various factors, including usage patterns, workload requirements, and cost considerations. While On-Demand instances offer the most flexibility, they are also the most expensive in the long term. Reserved Instances are an excellent option for steady-state workloads with predictable usage patterns, while Spot Instances can be a cost-effective choice for workloads with flexible timing. Savings Plans balance flexibility and cost savings, while Capacity Reservations and Dedicated Hosts provide fixed capacity and enhanced control and security, respectively. By understanding the benefits and limitations of each purchase option, users can make an informed decision about the best EC2 choice for their specific needs.
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