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Amazon EC2 Reserved Instance Model Gets Simplified

| by Janakiram MSV Follow 0 Followers on Dec 03, 2014. Estimated reading time: 1 minute |

AWS has simplified the pricing model for Amazon EC2 reserved instances. It has replaced the utilisation based pricing model with a simpler model to buy reserved capacity. 

Amazon EC2 instances are available in three pricing models - On-demand, reserved and spot. Reserved instances are preferred when customer are willing to invest in Amazon EC2 for longer term. Available in one year and three year terms, reserved instances provide assured capacity in the chosen region. But buying Amazon EC2 reserved instances was not a simple task. Customers had to understand the utilisation patterns of their workloads to invest in the right pricing model. Reserved instances pricing was based on low, medium and heavy utilisation modes. 

Starting Dec 2nd, AWS has simplified the pricing model of Amazon EC2 reserved instances. It has replaced utilisation based pricing with three different payment options. Customers can choose from the following payment terms -

  • All Upfront - Customers pay for the whole reserved Instance term  of one year  or three years through one upfront payment to get the maximum discount on the hourly price.
  • Partial Upfront - Customers make a partial payment  upfront, and then pay for the remainder over the course of the one or three year term.
  • No Upfront - Customers don't need to pay anything upfront but commit to pay for the reserved instance over the course of the reserved instance term. This option is available with one year term payments and offers 30% discount on hourly pricing. 

AWS chief evangelist, Jeff Barr mentioned in a blog post that customers investing in a three year term would typically get up to 63% discount when compared to On-Demand prices.

Customers with existing heavy, light, and medium utilisation reserved instances will see no change in their volume discount. 

Eric Hammond, an AWS Community Hero and active EC2 user commented, "One of the big differences between the old and the new is that you are always committing to spend the entire 1-3 years of cost even if you are not running a matching instance during part of that time." He points to fine print on the pricing page that says 

When you purchase a Reserved Instance, you are billed for every hour during the entire Reserved Instance term that you select, regardless of whether the instance is running or not.

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