Many get confused by the difference between an AWS Savings Plan vs Reserved Instances. At its simplest, AWS Savings Plans are a pricing model that involves committing to a certain hourly spend for one or three years. On the other hand, Reserved Instances require you to commit to a specific instance configuration for one or three years.
While both come at a cheaper rate than on-demand instances, understanding the differences between AWS Savings Plans and Reserved Instances is key to choosing the most cost-effective option. This article compares these two options, highlighting their similarities, differences, advantages, disadvantages and so on.
Definition & Types: What Are AWS Savings Plans?
AWS Savings Plans are one of AWS’ discounted pricing models. They offer cheaper rates than regular on-demand instances when you commit to spending a specific amount hourly for one or three years. Relative to on-demand instances, AWS Savings Plans offer savings of up to 72%, which are applied irrespective of the operating system, availability zone or region.
the instances around the hourly spend commitment.
This pricing model stands out because of its flexibility. Compared to some other discounted pricing models available on Amazon Web Services (like Standard Reserved Instances), its configuration barely has any restrictions.
There are three types of Savings Plans on AWS: Amazon SageMaker Savings Plans, Compute Savings Plans and EC2 Instance Savings Plans.
Advantages of AWS Savings Plans
AWS Savings Plans primarily offer a cheaper way to run workloads on AWS. Beyond that, they are flexible and straightforward.
- Relatively inexpensive: Compared to on-demand instances, AWS Savings Plans offer discounts of up to 72%, depending on the type. The savings are automatically applied once you commit to an hourly spend for a one-year or three-year term.
- Flexible: You can change the Compute and SageMaker Savings Plans as long as you stay within the hourly spend. Also, unlike Reserved Instances, AWS Savings Plans apply to other services besides EC2 instances (like AWS Lambda and Fargate).
- Straightforward: Thanks to its flexibility, you can use one AWS Savings Plan for instances with differing configurations. This means you don’t need multiple Savings Plans for instances that serve different purposes.
Disadvantages of AWS Savings Plans
While they are flexible, AWS Savings Plans mainly apply to compute, and there may be some upfront costs.
- Can’t be resold: While AWS Savings Plans are pretty flexible, they’re not resellable like Reserved Instances, so you’re stuck with the instances if they ever become redundant.
- Mainly for compute: AWS Savings Plans apply mainly to EC2 instances and instances used for SageMaker, AWS Fargate and AWS Lambda. You can’t use it for other AWS services.
- Upfront costs: While you may choose the “no upfront” payment option, the best discounts come when you incur some upfront costs.
Definition & Types: What Are AWS Reserved Instances?
Reserved Instances (RIs) are an Amazon Web Services pricing model that offers significant discounts when you commit to using instances for one or three years. The discounts can be as high as 72% compared to regular on-demand instance rates.
Of course, the primary upside of Reserved Instances is that your EC2 instance on AWS costs less. However, beyond being relatively inexpensive, this option guarantees that the instances you reserve will always be available when you need them.
There are three types of EC2 Reserved Instances: Standard Reserved Instances, Convertible Reserved Instances and Scheduled Reserved Instances.
Advantages of AWS Reserved Instances
AWS Reserved Instances offer huge cost savings and guaranteed compute power. They are also somewhat flexible and might be resellable when they’re not needed.
- Cost savings: Reserved instances come at discounted rates relative to on-demand instances.
- Guaranteed compute power: With Reserved Instances, you are guaranteed access to certain instances at all times within the commitment period.
- Flexibility: Standard Reserved Instances are financially flexible; you can resell them when they are no longer needed. While not sellable, Convertible RIs can be modified and exchanged.
- Can be resold: You can resell and buy Standard Reserved Instances in the AWS Marketplace.
Disadvantages of AWS Reserved Instances
While flexible in some ways, certain AWS RI types can also be inflexible. Furthermore, there are estimation risks and upfront costs associated with them.
- Inflexibility: Standard Reserved Instances can only be modified slightly. For instance, you can’t switch to a different instance family or use a different region.
- Estimation risks: Before using Reserved Instances, you should assess how many instances you need in order to avoid overestimating or underestimating.
- Upfront costs: The best discounts come with upfront costs, but upfront payments tie cash down.
- Limited applicability: Reserved Instances apply only to EC2 instances.
At a Glance: AWS Reserved Instances vs Savings Plan
AWS Reserved Instances and AWS Savings Plans are discounted, commitment-based pricing models. However, while Reserved Instances don’t have an hourly spend obligation, the Savings Plans do. This chart gives an overview of what each pricing model offers.
| Features: | AWS Savings Plans | AWS Reserved Instances |
|---|---|---|
| Overview | Savings when you commit to an hourly spend for 1 year or 3 years | Savings when you commit to EC2 instances for 1 year or 3 years |
| Types | EC2 Instances, Compute, Amazon SageMaker |
Standard, Convertible, Scheduled |
| Resellability | Not resellable | You can resell Standard Reserved Instances (not allowed for RIs purchased at a discount) |
| Applicability | EC2 Instances, Amazon SageMaker, AWS Fargate and AWS Lambda | EC2 Instances |
| Potential Savings | EC2 Instances — up to 72% Compute — up to 66% SageMaker — up to 64% |
Standard — up to 72% Convertible — up to 54% |
| Management | Flexible | Convertible instances can be exchanged and modified; Standard instances are modifiable only within their region & instance family |
| Payment Options | No Upfront (Monthly), Partial Upfront, All Upfront |
No Upfront (Monthly), Partial Upfront, All Upfront |
| Commitment Periods | 1 year 3 years |
1 year 3 years |
What Are the Similarities Between AWS Savings Plans & AWS Reserved Instances?
The main similarities between AWS Savings Plans and AWS Reserved Instances are that they both offer cheaper rates than on-demand instances, with the same maximum price cut on EC2 Instance Savings Plans and Standard Reserved Instances.
Both pricing models require a one-year or three-year commitment. They also offer flexible payment options, including partial upfront, all upfront and monthly (no upfront) alternatives.
What Are the Differences Between AWS Savings Plans & AWS Reserved Instances?
AWS Savings Plans are generally more flexible than AWS Reserved Instances. The application and savings potential across the subtypes of each model also differ. Here’s a breakdown of the differences between AWS Savings Plans and AWS Reserved Instances.
When to Use AWS Savings Plans
Being the more flexible model, AWS Savings Plans are more suitable under the following conditions:
- Optimizing costs while remaining flexible
- Running workloads with changing usage patterns
- Getting discounts across multiple AWS services, not just EC2 instances
- Having simpler management
- Having unpredictable future needs
When to Use AWS Reserved Instances
You should use AWS Reserved Instances in the following situations:
- Running workloads with predictable usage patterns
- When you want the ability to resell unused instances
- For running sensitive workloads
- For optimizing costs
Final Thoughts
AWS Savings Plans are more suitable for workloads and prospective workloads that may change. Contrarily, Reserved Instances are better for predictable workloads. Both models can offer the same maximum discount, but the Savings Plans’ discounts apply beyond EC2 instances.
In your opinion, which model would be better in most cases? Have you used any of these pricing models before? What other AWS discounted pricing models have you used? Leave a comment below and let us know what you think. Thanks for reading.
FAQ: AWS Savings Plan vs Reserved Instances
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The primary difference between AWS Reserved Instances and Savings Plans is the commitment to an hourly spend; Savings Plans require you to commit to an hourly spend, while Reserved Instances don’t.
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Reserved Instances only apply to EC2 instances. Also, when working with Standard Reserved Instances, you can’t switch to a different region or family.
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The three types of AWS Reserved Instances are Standard, Convertible and Scheduled.
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Use AWS Reserved Instances for stable workloads on guaranteed compute at low rates.
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