AWS Reserved Instances

Table of content

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.

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.

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.

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.

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.

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.

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.

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.

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