Amazon Web Services (AWS) offers various pricing models to cater to diverse user needs. Two prominent options are Reserved Instances (RIs) and Savings Plans, both designed to provide cost savings for users with predictable workloads. In this guide, we’ll delve into the key differences, advantages, and considerations when choosing between AWS Reserved Instances and AWS Savings Plans.
Understanding Reserved Instances (RIs)
Definition: Reserved Instances involve a commitment to a specific instance type in a chosen region for a term of one or three years.
Pricing Model: RIs offer significant cost savings compared to On-Demand pricing, with the trade-off being the upfront commitment.
Flexibility: RIs provide capacity reservations but lack flexibility in terms of instance family changes.
Applicability: Best suited for steady-state workloads with predictable resource needs.
Understanding Savings Plans
Definition: Savings Plans offer a more flexible pricing model, allowing users to commit to a consistent amount of usage (measured in $/hr) for a 1 or 3-year term.
Pricing Model: Savings Plans provide savings over On-Demand pricing, offering flexibility in instance family, size, and region.
Flexibility: Savings Plans adapt to changing usage patterns, making them suitable for dynamic workloads.
Applicability: Ideal for users with variable workloads or those seeking more flexibility than RIs.
Challenge: Reserved Instance Lock-In Hinders Adoption
The initial inflexibility in the pricing structure of Reserved Instances (RIs) posed a significant barrier to adoption. Customers operating in dynamic environments hesitated to embrace RIs due to valid concerns about being locked into a pricing model that lacked flexibility for adjustments. This apprehension stemmed from the genuine risk of getting trapped in a fixed pricing structure with no room for change.
For those customers who did invest in RIs, unforeseen alterations in workload requirements became a stumbling block, leading to a sunk investment and, in some cases, a negative return on investment (ROI). Consequently, a substantial number of potential AWS customers, who could have otherwise benefited from RIs, chose to refrain from utilizing them.
Comparative Analysis of AWS RIs and AWS Saving Plans
Flexibility
- RIs: Limited flexibility in terms of instance changes.
- Savings Plans: Greater flexibility, allowing changes across families, sizes, and regions.
Commitment and Pricing
- RIs: Upfront commitment in exchange for higher savings.
- Savings Plans: Offers flexibility with lower upfront commitment.
Workload Suitability
- RIs: Best for steady, predictable workloads.
- Savings Plans: Suited for variable or unpredictable workloads.
Instance Changes
- RIs: Fixed instance type throughout the term.
- Savings Plans: Allows changes in instance type, offering adaptability.
Considerations for Decision-Making
Savings Plans are exclusive to EC2 and Fargate, whereas Reserved Instances have broader applicability, covering EC2, RDS, Redshift, and ElastiCache. Convertible Reserved Instances offer the flexibility to augment the commitment (e.g., add extra reservations for additional EC2 Instances) during the contracted term, without extending the term itself. This proves particularly advantageous when circumstances change, and committing to a new 1- to 3-year term is impractical. In the case of Savings Plans, any additions to the original contract initiate a new contract, starting anew from day 0.
Workload Predictability
- Opt for RIs if your workload is steady and predictable.
- Choose Savings Plans for variable or uncertain workloads.
Upfront Commitment
- If you can commit upfront for higher savings, RIs may be preferable.
- If flexibility is crucial and a lower upfront commitment is desired, consider Savings Plans.
Instance Type Flexibility
- For fixed instance needs, RIs may suffice.
- If your workload demands flexibility in instance types, opt for Savings Plans.
EC2 Instance Savings Plans apply usage across any instance family, regardless of the operating system or tenancy. Conversely, Standard Reserved Instances can also apply to usage across any instance type family but necessitate instances to be Linux-based with default tenancy. Standard Reserved Instances provide the flexibility of being bought and sold on the AWS Marketplace, unlike Savings Plans, which do not permit adjustments to the committed spend once defined.
Convertible Reserved Instances are confined to a specific instance type, OS tenancy, and region, while Compute Savings Plans extend across all usage types in multiple regions.
Conclusion
Choosing between AWS Reserved Instances and Savings Plans hinges on the specific needs and characteristics of your workloads. Evaluate your usage patterns, budget constraints, and flexibility requirements to make an informed decision. Whether you prioritize substantial upfront savings or crave flexibility in adapting to changing demands, AWS offers pricing models tailored to diverse preferences.
