EC2 - Pricing Models - On Demand vs Spot vs Reserved vs Savings Plans - AWS Certification


Let’s get a quick overview of EC2 Pricing Models from an AWS certification perspective. We will look at important certification questions regarding EC2 Pricing Models - On Demand vs Spot vs Reserved vs Savings Plans.

You will learn

  • Why is pricing of EC2 instances important?
  • What are the different EC2 pricing models offered by AWS?
  • How do they compare - On Demand vs Spot vs Reserved vs Savings Plans?
  • How do you choose - On Demand vs Spot vs Reserved vs Savings Plans?

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EC2 Pricing Models Overview

Table below gives a quick overview of the EC2 pricing models.

Pricing Model Description Details
On Demand Request when you want it Flexible and Most Expensive
Spot Quote the maximum price Cheapest (upto 90% off) BUT NO Guarantees
Reserved Reserve ahead of time Upto 75% off. 1 or 3 years reservation.
Savings Plans Commit spending $X per hour on (EC2 or AWS Fargate or Lambda) Upto 66% off. No restrictions. 1 or 3 years reservation.

Let’s go in-depth in the next sections.

EC2 On-Demand

On Demand is all about “On demand resource provisioning”

  • Use and Throw!

This provides highest flexibility at highest cost.

EC2 On-Demand is Ideal for:

  • A web application which receives spiky traffic
  • A batch program which has unpredictable runtime and cannot be interrupted
  • A batch program being moved from on-premises to cloud for the first time

EC2 Spot instances

In the older Spot instance model, you bid for spot instances and the highest bidder wins.

In the new Spot instance model, you quote your maximum price. Prices are decided by long term trends.

Important things to note about Spot instances:

  • Up to 90% off (compared to On-Demand)
  • Can be terminated with a 2 minute notice
  • Ideal for Non time-critical workloads that can tolerate interruptions (fault-tolerant)
    • A batch program that does not have a strict deadline AND can be stopped at short notice and re-started
  • (Best Practice) Stop or Hibernate EC2 instance on receiving interruption notice

Spot instances can also be requested for specific duration and across a range of instance types. Let’s look at these variations now.

EC2 Spot Block and Spot Fleet

Spot Block

  • Allow you to request Spot instances for a specific duration (1 or 2 or .. or 6 hours)
  • Recommended for jobs that take finite time to complete

Spot Fleet

  • Using Spot Fleet, you can request spot instances across a range of instance types
  • Advantage : The more instance types that you specify, the better your chances of having your target capacity fulfilled

EC2 Linux Spot Instances - Pricing

Let’s understand the pricing of Spot Instances:

  • ZERO charge if terminated or stopped by Amazon EC2 in the first instance hour
  • Otherwise you are charged by second

Let’s look at a few examples:

  • If EC2 terminates spot instance after 50 minutes, you pay ZERO
  • If you terminate spot instance after 50 minutes, you pay for 50 minutes
  • If either EC2 or you yourselves terminate spot instance after 70 minutes, you pay for 70 minutes

EC2 Spot Instances - Remember

Spot instances can be terminated, stopped, or hibernated when interrupted

  • Default - terminated
  • Use maintain option while creating spot request for stop and hibernate options
  • Hibernating a Spot instance allows you to save state of EC2 instances and quickly start up

To completely close a spot request:

  • Step 1. Cancel Spot Request
  • Step 2. Terminate all Spot Instances
  • (Remember) Canceling a spot request might not terminate active spot instances

EC2 Reserved Instances

EC2 Reserved Instances is all about reserving EC2 instances ahead of time!

There are three types of reserved instances:

  • Standard
  • Convertible
  • Scheduled

There are three different Payment models supported:

  • No Upfront - $0 upfront. Pay monthly installment.
  • Partial Upfront - $XYZ upfront. Pay monthly installment
  • All Upfront - Full amount upfront. $0 monthly installment.

Remember :

  • Earlier you pay, more the discount.
  • ($$$) All Upfront < Partial Upfront < No Upfront (A difference upto 5%)

EC2 Standard Reserved Instances

When you ask for “EC2 Standard Reserved Instances”, you make this commitment:

Commitment : (In a region) I reserve an EC2 instance with a specific platform(for example, Linux), a specific instance type(for example, t2.micro) for a term of 1 year or 3 years

Important things to note:

  • You can switch to other instance sizes within the same instance family (t2.large to t2.xlarge)
  • You can switch Availability Zones
  • You CANNOT change instance families, operating systems, or tenancies (default or dedicated)

EC2 Convertible Reserved Instances

When you ask for “EC2 Convertible Reserved Instances”, you make this commitment:

Commitment : (In a region) I reserve an EC2 instance for a term of 1 year or 3 years

Important things to note:

  • You can change instance families, operating systems, or tenancies (default or dedicated)
  • You can switch Availability Zones and instance size

EC2 Scheduled Reserved Instances

Commitment : (In a region) I reserve an EC2 instance part-time for a year - X hours every month/week/day at a specific time ZZ:ZZ

Important things to note:

  • (Restriction) Only available for a few instance types (ex: C3, C4, M4, R3) in a few regions (ex: US East (N. Virginia), US West (Oregon), Europe (Ireland))
  • You can sell reserved instances on the AWS Reserved instance marketplace if you do not want to use your reservation

Here are some of the important utility programs where this would be the best option:

  • Your program generates bills on first day of the month
  • You have a batch program that runs for a few hours every day
  • You have a Weekend batch program that runs for a few hours every week

EC2 Reserved Instances - Summary

Let’s look at the summary of EC2 reserved instances:

  • Standard: Commit for a EC2 platform and instance family for 1 year or 3 years. (Up to 75% off)
  • Convertible: Standard + flexibility to change EC2 platform and instance family. (Up to 54% off)
  • Scheduled: Reserve for specific time period in a day. (5% to 10% off)

EC2 Compute Savings Plans

EC2 Compute Savings Plans provide a lot of flexibility.

Commitment : I would spend X dollars per hour on AWS compute resources (Amazon EC2 instances, AWS Fargate and/or AWS Lambda) for a 1 or 3 year period

Important things to note:

  • Up to 66% off (compared to on demand instances)
  • Provides more flexibility:
    • You can change instance family, size, OS, tenancy or AWS Region of your Amazon EC2 instances
    • You can switch between Amazon EC2, AWS Fargate and/or AWS Lambda

EC2 Instance Savings Plans

EC2 Compute Savings Plans provide flexibility restricted to Amazon EC2 instances.

Commitment : I would spend X dollars per hour on Amazon EC2 instances of a specific instance family (General Purpose, for example) within a specific region (us-east-1, for example)

Important things to note:

  • Up to 72% off (compared to on demand instances)
  • You can switch operating systems (Windows to Linux, for example)

EC2 Pricing Models - Quick Review for Certification Exam

https://www.ec2instances.info/

Pricing Model Usecases
On Demand Spiky workloads.
Spot Cost sensitive, Fault tolerant, Non immediate workloads.
Reserved Constant workloads that run all the time.
Savings Plans Constant workloads that run all the time and you want more flexibility.

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