Amazon Revamps Reserved Instance Pricing

One issue is that EC2 instances had complex pricing. Customers when buying Reserved Instances had to choose between light, medium or heavy utilization. As of early December, fees are based on how much a customer pays upfront.

Meanwhile Light and Medium Instances will be discontinued in February of next year.

For instance, if you pay 100% upfront, you’ll save round about 63% when compared to On Demand Pricing, which is basically the most expensive way to go. Reserved Instances with no upfront payments save about 30% compared to On Demand. Customers can also opt for partial upfront payments.

Here is how the two pricing schemes compare. “Amazon Elastic Compute Cloud (Amazon EC2) and Amazon Relational Database Service (Amazon RDS) provide different ways to purchase an instance (virtual server) in the cloud. The On-Demand Instance pricing option lets you purchase an instance by the hour with no long-term commitments—you turn capacity on and off instantly. The Reserved Instance (RI) pricing option lets you make a low, one-time payment for each instance you want to reserve, and in turn, you receive a significant discount on the hourly usage charge for that instance, and are guaranteed capacity. The Spot Instance pricing option (available only for Amazon EC2) allows you to bid for unused compute capacity. Instances are charged at the Spot Price, which fluctuates periodically depending on the supply and demand for Spot Instance capacity. Functionally, Reserved Instances, On-Demand Instances, and Spot Instances are the same,” Amazon explains.

More details from Amazon are available here:

Understanding that customers can’t always predict how much capacity they’ll need or how, Reserved Instances can be move to a different Network Platform or Availability Zone.

For more on the economics of AWS, click here: AWS TCO.

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