Amazon Elastic Compute Cloud (Amazon EC2) provides cloud-based compute resources, designed especially for scalability. The service comes with a user-friendly interface that provides complete control over cloud resources, which are provisioned using EC2 instances.
An EC2 instance acts as a virtual server hosted in the Amazon Web Services (AWS) cloud. There are many types of EC2 instances, each can be customized to the unique needs of the operation, using various operating systems (OS) and applications.
Each EC2 instance type is priced differently, but there are other, additional, aspects that determine AWS EC2 pricing. Pricing tiers and models, for example, can significantly impact billing charges, as well as optimization features like Amazon EC2 Auto Scaling and AWS Compute Optimizer.
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Amazon offers new users a chance to check out various AWS services, free of charge, for up to 12 months. EC2 users with a Free Tier account can get 750 hours per month.
The free tier provides t2.micro instances (or t3.micro for the regions in which t2.micro is unavailable), including Windows, Linux, RHEL, or SLES. You can opt to use mainly micro instances, to ensure you do not exceed the capacity offered by the free tier.
EC2 offers an on-demand pricing model, which charges only for compute capacity usage. You can choose between billing per hour or per second, and pricing varies between instance types and regions. On-demand pricing eliminates long term commitments and upfront payments, providing a high level of scalability.
On-demand instances let you easily increase and decrease compute capacity, and are highly recommended for short-term workloads or operations experiencing frequent and unpredictable spikes in demand. You can also leverage on-demand instances for software development and testing.
EC2 spot instances let you request spare EC2 capacity, and pay significantly less (up to 90% off) the original on-demand price. Because they can be interrupted on short notice, spot instances are typically used for applications working at flexible start and end schedules, or to accommodate urgent spikes in demand for compute resources.
Reserved instances can provide as much as 72% in savings. You can use RIs to significantly reduce your overall computing costs, in exchange for committing to use AWS EC2 for a long period of time (1 or 3 year terms).
RIs are typically used for applications that operate with steady state usage. You can select RIs with Regional Scope, which lets you change the availability zone (AZ) and instance type over time, but does not reserve capacity. Alternatively, RIs can have Zonal Scope, which reserves capacity, but does not provide flexibility over AZ and instance type.
Dedicated Hosts provide you with physical EC2 servers, which are entirely dedicated to your workloads. Dedicated Hosts let you use your own existing server-bound software licensing, including SQL Server, SUSE Linux Enterprise Server, and Windows Server.
Using your own dedicated server and license can reduce your costs and help you meet compliance requirements. However, you should make sure that all of your existing license terms are compatible with the environment.
When you start estimating Amazon EC2 costs, you need to account for the following aspects:
The AWS Pricing Calculator can help you estimate the costs of various AWS services. Before building your solution, you can explore price points for your model, calculate an estimated cost, and determine which contract terms and instance types suit your model best.
AWS provides various tools and services you can use to optimize and reduce EC2 costs, including AWS Saving Plans, Amazon EC2 Auto Scaling, AWS Compute Optimizer, and spot instances.
AWS Savings Plans offer flexible pricing models that can help you save up to 72% when using AWS services and resources, including EC2 instances. Savings are applicable regardless of instance size, family, operating system, AWS Region, or tenancy.
Similar to EC2 Reserved Instances, AWS Saving Plans offer major discounts in return for a long term commitment (1 or 3 years) to use certain amounts of compute resources, which are measured in $/hour.
Once you sign up for Saving Plans, you can manage your plans and optimize costs using AWS recommendations. You also gain access to the AWS Cost Explorer, which provides performance reports and budget alerts.
Savings Plans offer three payment options:
While Saving Plans and EC2 RI both offer major savings for on-demand instances, there are significant differences between the two:
Amazon EC2 Auto Scaling enables you to automatically remove or add EC2 instances, according to predefined configurations. This service comes with various features that can help you maintain the availability and health of your workloads, including a fleet management feature, and capabilities for predictive and dynamic scaling.
EC2 Auto Scaling can help you save costs by dynamically adapting capacity to current application loads, or by automatically scaling back EC2 instances on a fixed schedule (for example, during a weekend or after a planned promotion).
The Compute Optimizer offers optimization recommendations you can use to reduce overall resources costs and improve performance. Compute Optimizer leverages machine learning (ML) when analyzing historical utilization metrics, as well as determining which EC2 instance types are ideal for your use case. The model leverages the accumulated experience of AWS to identify workload patterns and generate recommendations for optimal use of AWS resources.
While AWS offers Savings Plans, RIs and spot instances for reducing EC2 cost, these all have inherent challenges that must be handled. Spot instances can be 90% less expensive than on-demand instances, however, as spare capacity, AWS can reclaim those instances with just a two minute warning, making them less than ideal for production and mission-critical workloads. AWS Savings Plans and RIs can deliver up to 72% cost savings, but they do create financial lock-in for 1 or 3 years and if not fully utilized can end up wasting money instead of saving it. Spot by NetApp addresses all these challenges allowing you to reliably use spot instances for production and mission-critical workloads as well as enjoy the long-term pricing of RIs without the risks of long-term commitment and much more.
Key features of Spot by NetApp’s cloud financial management suite include:
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