AWS Savings Plans vs. Reserved Instances

Today with over 200 EC2 Instance Types and 22 Regions, companies with large deployments are looking to access meaningful savings, without having to invest a lot of time in managing RIs across their dynamic environments.
Savings Plans is AWS’ most recent pricing model to allow for increased flexibility within a “committed usage” framework.

In this blog post we will go over the new Savings Plan offering, explain how it aligns with various AWS reserved instance flavors, and how Eco by Spot plays an essential role in the expanding universe of AWS pricing options.

AWS Savings Plans: What are they? How do they work?

With Savings Plans, AWS customers commit to spend a desired amount per hour, e.g. $35/hour, for either 1 or 3 years. In this example, anything spent up to $35 will be charged in accordance with Savings Plans rates (see below). Any spend above the committed amount will be charged at On-Demand rates.
AWS Savings Plans offers two tracks:

• EC2 Instance Savings Plans
  This offering is similar to Standard RIs with up to 72% savings, and provides size flexibility within instance family, and within selected region, as well as the ability to switch OS and tenancy from dedicated to default (and vice versa).
• Compute Savings Plans
  This offering is similar to Convertible RIs with up to 66% savings, and provides instance family, size and region flexibility across EC2 Instances and Fargate usage.

Savings Plans vs. Reserved Instances

As AWS will continue to provide Reserved Instances alongside Savings Plans, it is important to determine which options will be best for you. As always, depending on your compute usage and projected capacity, there are benefits and limitations that can work for, or against, optimized cloud consumption.

Here are some important differences to consider:

EC2 Instance Savings Plans vs Standard RIs

While similar in many ways, EC2 Instance Savings Plans will apply usage across an instance family, regardless of OS or tenancy.  This allows greater flexibility in where the discounts can be allocated. Standard RIs can also apply to usage across an instance type family, but require the instances to be Linux and default tenancy.

Liquidity and Flexibility

Unlike Standard RIs, EC2 Instance Savings Plans cannot be sold in the Reserved Instance Marketplace, and there is no separate Marketplace for Savings Plans.  This means that spend per hour within an instance family must remain at commitment levels for the term of the plan to capture all of the savings.

For example, if you are using the C5 instance family and then decide that for some workloads that C5n is the better choice, you will not be able to modify the EC2 instance Savings Plan to adjust to this change.
With Standard RIs however, it would be possible to sell the C5 instance reservations and purchase C5n reservations to keep utilization 100% optimized at the highest savings rates.

Ensure that your workloads are fully set to stay on the instance family they are on, or if you may have to change the family in the future, it needs to be a switch that changes all of the instances and not just a portion of them.

Standard Reserved Instances – Free Market Economy

A key feature of Standard Reserved Instances is the ability to sell reservations that are no longer being used.  The ability to both buy and sell Standard Reserved Instances enables the option of finding substantial savings while running short-term projects, without a long term commitment.

Compute Savings Plans vs Convertible RIs

Convertible RIs are scoped to a specific instance type, OS tenancy and region. Compute Savings Plans will apply across all of your usage types in multiple regions.

Convertible RIs Allow Extensible Contracting

Convertible RIs allow for the increase of commitment (i.e. add additional RIs to cover more EC2 Instances) during the contracted term, without the need to increase the term. This is especially helpful when needs change and committing to a new 1 to 3 year term doesn’t make sense.  With Savings Plans any addition to the original contract is done with a new contract that starts from day 0.

You also have to ensure that if any part of your usage changes, whether instance size, family, operating system or tenancy, the new allotment should fully use the existing EC2 Instance Savings Plans commitment, otherwise part of it will go unused. While these new plans offer a great amount of flexibility a combined strategy with other RI options will capture the highest amount of savings possible.

The big question that remains is how to best determine the correct commitment amount?

Analyzing historical data and making projections about your projected usage and spend is extremely complicated.
For many companies this requires a full-time team dedicated to working with both Finance and DevOps in determining the correct blend of upfront commitment with sufficient flexibility to handle any future changes in consumption.
This is where Eco by Spot plays an essential role.

Eco by Spot – Automate both Strategy and Execution, Across All AWS Reserved Capacity and Pricing Offerings

AWS Savings Plans add yet another engine in Eco’s capacity reservation arsenal. Combined with Reserved Instances that can be bought and sold on the RI marketplace and Convertible Reserved Instances that allow for commitment changes within a term, Eco now has the ability to cover the widest range of capacity needs at the highest possible savings.

Usage of compute and engineering patterns change quickly in the cloud. Through deep analytics and predictive machine learning modeling, Eco will craft a strategy that maximizes savings with the use of Savings Plans, Reserved Instances and additional cost-saving opportunities in the RI Marketplace.

Savings Plans are useful for compute spend that has a high level of confidence, which from Spot’s extensive customer data and historical usage records, would be a ~90% level of certainty or greater, for a year or longer. For spend with lower confidence, Standard Reserved Instances provide high levels of savings and the flexibility to be sold on the RI Marketplace before the full commitment term has been reached, in the event that capacity requirements change.

The RI Marketplace adds value to both savings and flexibility. With an expansive customer base, Eco creates a private marketplace that facilitates instant movement of short term and high value reservations that provide significant savings, without long term commitment.

By combining the best features of Savings Plans with reserved instances, Eco continually manages and actively implements the optimal commitment strategy for any AWS Account.

Get started with Spot Eco to maximize ROI on your Reserved Instance and Savings Plans today!