AWS Reserved Instances (RIs) are a pricing option offered by Amazon EC2 that allows users to reserve computing capacity in advance for a one- or three-year term, in exchange for significant discounts compared to On-Demand Instance pricing. RIs are ideal for predictable, steady workloads and offer cost savings of up to 72%, depending on the commitment and payment plan selected.
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Key Components of Reserved Instances
- Term & Commitment:
1. Choose between 1-year or 3-year terms.
2. Longer terms typically yield higher discounts. - Payment Options:
1. All Upfront (AURI): Maximum savings.
2. Partial Upfront (PURI): Balanced cost and flexibility.
3. No Upfront (NURI): Monthly payments, lower discounts. - Types & Flexibility:
1. Standard RIs: High discount, limited flexibility.
2. Convertible RIs: Lower discounts, can be exchanged for different configurations (e.g., instance type, family). - Scope & Attributes:
1. Zonal RIs: Reserve capacity in a specific AZ.
2. Regional RIs: Broader flexibility across AZs.
3. Tied to attributes like instance family, type, platform, and tenancy. - Savings & Optimization:
1. Can deliver up to 72% cost savings over On-Demand pricing.
2. Suitable for predictable workloads and long-term planning.
Types of Reserved Instances
| Features | Standard RI | Convertible RI |
| Discount Level | Up to 72% compared to On-Demand pricing | Up to 54% compared to On-Demand pricing |
| Term Options | 1 or 3 years | 1 or 3 years |
| Flexibility | Fixed instance type, OS, and tenancy | Allows changes to instance family, OS, tenancy, and more |
| Modify Reserved Instances | Limited to AZ, scope, and networking | Broad modification options via exchange |
| Use Case | Predictable, steady workloads with no expected changes | Dynamic workloads with potential for configuration changes |
| Exchange Reserved Instances | Can't be exchanged. | Convertible Reserved Instances can be exchanged at any time during their term for another Convertible RI with different attributes, such as instance family, type, platform, scope, or tenancy. |
How do AWS Reserved Instances work?
- Automatic Discounts: RIs offer lower hourly rates, automatically applied when your EC2 usage matches the RI’s attributes.
- Capacity Reservation (Zonal RIs): Zonal RIs reserve capacity in a specific Availability Zone, ensuring instance availability.
- Regional Flexibility: Regional RIs don’t reserve capacity but apply discounts across multiple AZs and instance sizes.
- No Manual Effort: AWS Billing auto-applies the discount to eligible instances, simplifying cost optimization.
Best practices for using AWS Reserved Instances
- Analyze Your Workloads: Use tools like AWS Cost Explorer and CloudWatch to find steady-state workloads that would benefit most from Reserved Instances (RIs).
- Choose the Right RI Type: Pick Standard RIs for predictable needs, or Convertible RIs if your configurations might change down the road.
- Leverage Regional Scope When Possible: Regional RIs offer more flexibility across Availability Zones, helping maximize instance utilization.
- Use RI Reporting & Management Tools: Regularly review RI utilization reports and use AWS or third-party tools (like CloudKeeper) to ensure optimal allocation and avoid underutilization.
Benefits of AWS Reserved Instances
- Big Cost Savings: RIs can slash costs by up to 72% compared to on-demand pricing, making them perfect for steady workloads you plan to run long-term.
- Predictable Budget: With set terms and prices, RIs help you forecast and manage your cloud spending much more accurately over time.
- Flexible Payments: You can pick what works best for your budget and cash flow, choosing to pay all upfront, a partial amount upfront, or nothing upfront.
- Improved Resource Planning: With known usage patterns, RIs simplify resource provisioning, supporting long-term workload planning.
Limitations of AWS Reserved Instances
- Upfront Financial Commitment: Requires committing to a term and payment plan, which might not suit dynamic or rapidly evolving workloads.
- Not Ideal for Unpredictable Workloads: RIs are best suited for consistent usage; bursty or fluctuating workloads may result in underutilization.
- Limited Cost Savings if Misconfigured: Incorrect instance type, region, or scope selection can lead to low utilization, reducing the expected cost benefits.
FAQs on AWS Reserved Instances
- Q1. How much can I save with Reserved Instances?
You can save up to 72% compared to On-Demand pricing, depending on the term length, payment option, and instance type. - Q2. Can I cancel or modify a Reserved Instance?
You can't cancel RIs. However, Convertible RIs allow exchanges; Standard RIs can be modified. - Q3. Can Reserved Instances be shared across accounts?
Yes, if the accounts are part of the same AWS Organization and consolidated billing is enabled. - Q4. How does CloudKeeper help with RI optimization?
CloudKeeper offers automated Reserved Instance management, cost guarantees, and zero-risk commitments to help you maximize savings without manual intervention.
How Cloudkeeper Helps Optimize AWS Reserved Instances
- Zero-Risk Commitments: CloudKeeper manages RI purchases for you, offering savings without the risk of underutilization or long-term lock-ins.
- Guaranteed Savings: Get up to 15% savings from Day 1 on EC2 usage without any manual effort or forecasting.
- Automated Optimization: RIs are continuously adjusted based on real-time usage to maximize savings and reduce waste.
- Full Visibility: Gain clear insights into RI performance, utilization, and cost savings through intuitive dashboards.
- Expert FinOps Support: Dedicated specialists ensure governance, recommend improvements, and help align cloud usage with business goals.
