AWS Certified Cloud Practitioner
EC2 pricing models explained: On-Demand, Spot, RIs, Savings Plans
On-Demand Instances are paid by the second with no commitment. Savings Plans and Reserved Instances give a lower price in exchange for a 1- or 3-year commitment: Savings Plans to an hourly spend, Reserved Instances to an instance configuration. Spot Instances use spare capacity at a steep discount but can be interrupted.
The options in one line each
On-Demand Instances: pay by the second for the instances you run, with a 60-second minimum and no long-term commitment. AWS recommends them for short-term, irregular workloads that cannot be interrupted.
Savings Plans: commit to a consistent amount of usage, in USD per hour, for 1 or 3 years. You keep the freedom to choose the instance configuration. AWS recommends Savings Plans over Reserved Instances.
Reserved Instances: commit to a consistent instance configuration, including instance type and Region, for 1 or 3 years. A Reserved Instance is not a physical instance. It is a billing discount applied to matching On-Demand usage in your account.
Spot Instances: use spare EC2 capacity at steep discounts. EC2 can stop, hibernate or terminate them with a two-minute warning when it needs the capacity back. They suit flexible, interruptible work such as batch jobs and data analysis.
Dedicated Instances and Dedicated Hosts run on hardware dedicated to you, which can help with compliance and server-bound software licences. Capacity Reservations reserve capacity in a specific Availability Zone.
How a Reserved Instance is billed
A Reserved Instance's price depends on its instance type, Region, tenancy (shared or dedicated) and platform (for example Linux or Windows), plus the term and payment option. Its scope, regional or zonal, does not change the price.
There are three payment options. All Upfront: pay everything at the start and no hourly charges follow. Partial Upfront: pay part at the start, then a discounted hourly rate. No Upfront: pay nothing at the start and a discounted hourly rate for every hour of the term. With Partial and No Upfront, every hour of the term is billed whether a matching instance runs or not.
You cannot cancel a Reserved Instance after buying it. You might be able to modify it, exchange it if it is Convertible, or sell a Standard one on the Reserved Instance Marketplace.
Reserved Instances do not renew automatically. When the term ends, the instance keeps running without interruption and is billed at On-Demand rates.
Choosing between them
Can't commit to an instance configuration but can commit to an amount of usage: Savings Plans. Need guaranteed capacity in one Availability Zone: a zonal Reserved Instance or a Capacity Reservation (a regional Reserved Instance does not reserve capacity). Work can run whenever capacity is free and can be interrupted: Spot Instances. Short, unpredictable work that must not be interrupted: On-Demand Instances.
Where the exam catches people
- Believing a Reserved Instance is a separate server you launch: it is a billing discount applied to running instances that match its attributes.
- Believing a No Upfront Reserved Instance only bills the hours you use: every hour of the term is billed at the discounted rate, used or not.
- Believing a Reserved Instance renews or stops the instance when it expires: it does neither, and the instance continues at On-Demand rates.
- Believing Savings Plans tie you to one instance type: you commit to an hourly spend, not to an instance configuration.
- Believing Spot Instances suit a workload that must never stop: EC2 can interrupt them with a two-minute warning.