In 2019, AWS introduced Savings Plans, a flexible but committed capacity pricing model that provides cloud users with a way to purchase compute at a discounted price.
How do Savings Plans work?
In exchange for a discount price on compute capacity, customers who sign up for Savings Plans commit to a consistent amount of usage (e.g. $15/hour) for a one-year or three-year term. Any spend that exceeds the committed amount will be charged at the on-demand rates. Similar to the discount afforded by reserved instances, rates for savings plans can deliver between 66-72% cost reduction over on-demand.
Customers have three payment options when purchasing savings plans:
- No upfront payment with commitments charged on a monthly basis
- Partial upfront payment offers lower prices and customer are charged at least half of their commitment upfront, with the rest billed monthly
- All upfront payment offers capacity at the lowest price with the entire commitment paid in one full payment
You can find a detailed cost breakdown for Savings Plans across instance types and sizes here.
What are the different types of Savings Plans?
Along with different payment options, there are two different types of Savings Plans that customers can choose from, depending on their goals and workload requirements. Compute Savings Plan is more flexible but the cost savings are not as robust, while EC2 Savings Plans have higher potential savings but less flexibility.
- Compute Savings Plans can reduce EC2 costs by up to 66%, and can be applied to any EC2 instance with no limitation on region, instance family, operating system and tenancy. For example, at anytime, users can change from one instance type to another, or from one region to another, and can move their workload from EC2 to Fargate or Lambda.
- EC2 Savings Plans can reduce compute costs by up to 72%, but requires customers to commit to an instance family and region.
Compute Savings Plan
EC2 Savings plan
|Commitment||1 or 3 years||1 or 3 years|
|Services||EC2, Lambda, Fargate||EC2 only|
|Savings||Up to 66%||Up to 72%|
While these Savings Plan options offer significant cost savings, users should keep in mind that there are some limitations to consider before committing to a plan. Most notably, Savings Plans can only be applied to EC2, Fargate and Lambda, while other pricing model options (i.e. reserved instances) have a broader application. If you are also using reserved instances, AWS will prioritize RIs first and then fill in any gaps with Savings Plans, so actively managing your cloud infrastructure is critical to ensure your fully optimizing your infrastructure and not letting resources sit idle.
Spot by NetApp offers continuous optimization solutions that are designed to reduce the complexity of managing cloud infrastructure, and intelligently automates scaling decisions.
What are the differences between Savings Plans and Reserved Instances?
Savings Plans and Reserved Instances both offer compute at significantly lower cost that On-demand. However, these pricing models to differ in some notable ways:
- RIs have a broader applications, and can be used with RedShift, Elasticache and RDS.
- With Savings Plans, users commit to a minimum dollar per hour spend, while RIs require a commitment to a number of instances used.
- Standards RIs can be bought and sold on the AWS Marketplace, while Savings Plans cannot
- Commitments can be increased with convertible RIs during the contracted term without reset the term, and a new contract will start from day 0.
- EC2 Instance Savings Plans will apply usage across any given instance family, regardless of OS or tenancy. Standard reserved instances can also apply to usage across any given instance type but require the instances to be Linux and default tenancy.
- Convertible reserved instances are scoped to a specific instance type, OS tenancy and region while Compute Savings Plans will apply across all of your usage types in multiple regions.
Getting started with Savings Plans
Savings Plans can be accessed and purchased through the AWS Cost Management Console. Within the console, recommendations for Savings Plans are generated based on your usage and cost data, and provides you with options for the greatest estimated savings. You can specify parameters, including type, term, and payment options.
To make AWS Savings Plans a real part of your cloud cost optimization strategy, learn more about Spot by NetApp’s cloud cost optimization solutions.