What is an AWS Savings Plan?

AWS Saving Plans

Let’s dive a bit deeper into AWS Savings Plans. They’re all about helping you cut down on your AWS bill by locking in a specific usage level instead of paying those on-demand prices. For instance, if you commit to spending $50 per hour, AWS will offer you discounted rates for usage up to that amount across various services. If you happen to go over your commitment, no worries—those extra hours will just be charged at the standard rates.

This pricing model is a great fit for various scenarios, whether you’re a startup looking to keep your expenses in check or a large enterprise managing consistent workloads. There are two primary types of AWS Savings Plans: Compute Savings Plans and EC2 Instance Savings Plans. Each one offers its unique flexibility and potential for savings, which we’ll dive into in more detail below.

Types of AWS Savings Plans

Compute Savings Plans

• Most flexible option.
• Automatically apply to any EC2 instance, regardless of region, size, OS, or tenancy.
• Also supports AWS Fargate and AWS Lambda usage.

EC2 Instance Savings Plans

• Highest discount rate, but less flexible.
• Must commit to a specific instance family and region (e.g., m5 in us-east-1).
• Ideal for predictable, stable workloads.

Best Practices for Using AWS Savings Plans

1. Analyze Past Usage Trends:
Review your historical AWS usage to determine a safe hourly commitment without overcommitting.

2. Choose the Right Plan Type:
Use Compute Savings Plans for evolving workloads and EC2 Instance Plans for consistent, long-running instances.

3. Use a Mix of Commitment Terms:
Balance 1-year and 3-year plans to maintain flexibility while maximizing savings.

4. Monitor Utilization Regularly:
Track how much of your commitment is being used to ensure you’re getting full value.

5. Align with Budget Cycles:
Match the duration and commitment size of your Savings Plans with business forecasting and cloud spend strategy.

Advantages of AWS Savings Plans

• Significant Cost Savings:
  Save up to 72% compared to on-demand pricing, with even higher savings possible with long-term commitments.
• Increased Flexibility (Compute Plans):
  Discounts apply even if you change instance families, regions, or OS, supporting evolving workloads.
• Automatic Application:
  AWS applies the discount automatically to the most expensive eligible usage, ensuring maximum benefit.
• Supports Modern Workloads:
  Compute Savings Plans cover Lambda and Fargate, making them suitable for containerized and serverless architectures.
• Simplified Billing:
  Fewer line items and more predictable bills make cost management easier for finance and DevOps teams.

How to Purchase an AWS Savings Plan

• Open AWS Cost Explorer
  Go to the AWS Billing console and select “Purchase Savings Plans.”
• Choose Plan Type and Term
  Select either Compute or EC2 Instance Savings Plans and choose a 1-year or 3-year term.
• Set Hourly Commitment
  Specify the average hourly spend you want to commit to.
• Select Payment Option
  Choose from No Upfront, Partial Upfront, or All Upfront payment types.
• Review and Purchase
  Confirm your selections and complete the purchase — the plan begins immediately.

Achieving Better AWS Savings Plan ROI with CloudKeeper

While AWS Savings Plans are powerful, getting the most value requires precision. CloudKeeper helps maximize ROI by:

• Identifying Optimal Commitment Levels:
  Our platform analyzes historical usage patterns to recommend ideal hourly commitments.
• Eliminating Underutilization Risks:
  CloudKeeper ensures you don’t overcommit, avoiding wasted spend.
• Blended Optimization with Reserved Instances:
  We recommend the best mix of RIs and Savings Plans based on your specific usage profile.
• Guaranteed Cost Reduction:
  CloudKeeper delivers guaranteed savings without locking you into rigid configurations.
• Ongoing Expert Support:
  Our team continuously monitors your commitments to ensure consistent cost efficiency.

Frequently Asked Questions (FAQs)

• Q1: What’s the difference between Reserved Instances and Savings Plans?
  While Savings Plans provide the same discounts as Reserved Instances, they come with added flexibility that allows you to switch between different instance types and services.
• Q2: Can I change my Savings Plan after purchase?
  No, AWS Savings Plans are a commitment and cannot be modified after purchase.
• Q3: Do Savings Plans cover EBS or other services?
  No, Savings Plans only apply to compute usage (EC2, Fargate, Lambda), not to storage or networking.
• Q4: What happens if I exceed my hourly commitment?
  Any usage beyond your committed amount is billed at standard on-demand rates.
• Q5: Can I use multiple Savings Plans together?
  Yes, AWS automatically applies the most beneficial plan first to maximize your savings.