AWS Reserved Instances

by Maxim Melamedov | October 21, 2019

Why should I use Reserved Instances?

Reason 1: Cost savings
It’s no secret that AWS On-Demand EC2 instances can cost a lot to run, often causing friction between ops teams and those in control of finances. The alternative, using discounted Reserved Instances, can significantly lower operational costs when optimally configured, by up to 75% over On-Demand pricing. Business 101: cost savings make bosses happy.

Reason 2: Reserving capacity
What it says on the label; Reserved Instances are for your use only, perfect for ensuring capacity for mission-critical resources within a specified Availability Zone. This is handy if you use autoscaling and experience spikes within specific regions. While availability isn’t absolutely guaranteed by Amazon, you’ll be happy to know you’re first in line as opposed to On-Demand tenants.

How Reserved Instances work

Fixed-term lease periods
Reserved Instances are leased on a fixed-term period, with a choice of 1 or 3 years, with greater discounts over 3 year periods.

Three types of payment plans
Payment is made either all upfront (for the biggest savings), partial upfront (half upfront, then half-payments monthly), or monthly with no upfront costs. Cost benefits are weighted towards upfront payments, so it’s recommended that even if you can’t afford to pay everything upfront, to seriously consider the partial upfront payment plan.

Moving from On-Demand to Reserved Instances
When switching from On-Demand EC2 instances, discounts are automatically applied to running instances that match RI attributes.

In fact, RIs aren’t a physical or virtual resource, they’re simply a pricing model, so there is no change to running EC2 instances when switching from On-Demand to Reserved Instance or vice versa.

You can check out all the up to date RI pricing over at Amazon.

Let’s take, for instance, if you were running Linux c5.xlarge instances out of US East region (Ohio). On-Demand instances presently cost $0.17/hr, however you can drop that down to $0.108/hr if you purchase a year-long RI without any upfront spending.
AWS Reserved Instances
The savings are even more significant over a three-year term: $0.07/hr without any upfront, for a 59% price drop.
AWS Reserved Instances

Selling in the Reserved Instance Marketplace

So, we’ve established that RIs can be significantly cheaper to run than On-Demand instances. However, what about if you purchase RIs that you don’t end up using? Is that just money down the drain?

Thankfully, there’s a reseller marketplace available where customers can snap up leftover RIs that other organizations aren’t using. Sellers may set the upfront price for Reserved Instances they no longer need and buyers have the potential to pick up a bargain.

This significantly eases the ‘fear’ of making a locked-in decision; there’s another option instead of kissing your money goodbye should you wind up not needing the RIs purchased for the full length of the term. You can also investigate what other people are selling, if you’re looking to switch instance types or zones.

You’re still able to use any listed RIs up until the point of sale, so make sure to deallocate resources before or soon after to avoid unnecessary On-Demand fees after transfer.

How Cloudvisor works

Cloudvisor enables companies to significantly reduce cloud costs on production and mission-critical applications without compromising stability or requiring any architecture changes.

We provide a fully automated solution for Reserved Instance Management that unlocks significant savings and eliminates the manual overheads of buying, selling and exchanging reserves on the RI marketplace. Let us do the heavy lifting.

Our platform operates on a pay-as-you-go model, with no upfront fees. We help to optimize your EC2 instances for the greatest cost savings, with only 20% of the savings as our fee. It’s a no brainer!

Using Cloudvisor, you can benefit from all of the cost savings with zero commitment. Our team brings over a decade of deep domain expertise to our solution, putting us in an ideal position to help companies manage their Reserved Instances seamlessly.

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