In the world of AWS cost optimization, two terms often come up: Reserved Instances (RIs) and Savings Plans. While both offer significant discounts for long-term commitments, they have distinct characteristics that can make one more suitable than the other depending on your specific needs. This article aims to demystify these options and help you make an informed decision.
Understanding the Basics
Both Reserved Instances and Savings Plans are AWS pricing models designed to provide discounts in exchange for long-term commitments. These commitments typically span one or three years, offering substantial savings compared to on-demand pricing. However, it’s important to note that neither option allows for refunds, so careful planning is essential.
Reserved Instances: The Traditional Approach
Key Features
- Offers up to 75% discount when purchased in advance
- Requires specification of instance type, family, and region
- Unused capacity can be resold on AWS Marketplace
Reserved Instances have been a staple of AWS cost optimization for years. They provide a straightforward way to save on EC2 instances when you have predictable, steady-state usage. The ability to resell unused capacity on the AWS Marketplace is a unique feature that can help recoup costs if your needs change.
Savings Plans: The Flexible Alternative
AWS offers two types of Savings Plans:
1. EC2 Instance Savings Plans
- Up to 72% discount
- Applies to a specific instance family in a specific region
- Cannot be resold on AWS Marketplace
2. Compute Savings Plans
- Up to 72% discount
- Applies to various compute services: EC2, Fargate, Lambda
- Allows changes in instance type or family within EC2
- Cannot be resold on AWS Marketplace
Savings Plans, particularly Compute Savings Plans, offer more flexibility in terms of the services they cover and the ability to change instance types. This makes them an attractive option for organizations with evolving infrastructure needs or those looking to adopt containerized or serverless architectures.
Making the Right Choice
When deciding between Reserved Instances and Savings Plans, consider the following factors:
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Flexibility: If you need the ability to change instance types or use different compute services, Compute Savings Plans are likely the better choice.
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Discount: Reserved Instances offer a slightly higher maximum discount (75% vs 72%), which might be significant for large-scale operations.
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Resale Option: Only Reserved Instances can be resold on the AWS Marketplace, which can be valuable if your needs change unexpectedly.
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Service Coverage: If you use or plan to use services like Fargate or Lambda, Compute Savings Plans will cover these in addition to EC2.
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Infrastructure Stability: If your infrastructure is stable and you’re confident about your long-term EC2 needs, Reserved Instances might be more advantageous.
Conclusion
In most cases, Compute Savings Plans offer the best balance of flexibility and savings for modern cloud infrastructures. They’re particularly suitable if you’re considering containerization or serverless architectures.
However, Reserved Instances still have their place. If you have very stable, predictable EC2 usage, aren’t planning major architecture changes, and value the ability to resell unused capacity, Reserved Instances might be the right choice.
Ultimately, the decision between Reserved Instances and Savings Plans should be based on a thorough analysis of your current and future infrastructure needs, as well as your organization’s appetite for commitment versus flexibility.
Remember, cloud cost optimization is an ongoing process. Regularly review your usage and adjust your strategy to ensure you’re always getting the best value from your AWS investment.
