How to Choose Between AWS Reserved Instances and Savings Plans

What Are AWS Savings Plans?

AWS Savings Plans provide discounted pricing in exchange for committing to a consistent amount of compute usage, measured in dollars per hour, for one or three years. Unlike Reserved Instances, Savings Plans do not require you to commit to a specific instance configuration. 

For compute workloads, the two main Savings Plans relevant to EC2 are:

Compute Savings Plans: The most flexible option. They automatically apply to eligible EC2 usage across instance families, sizes, operating systems, tenancies, and AWS Regions. They can also apply to AWS Fargate and AWS Lambda.

EC2 Instance Savings Plans: Offer higher potential savings in exchange for committing to a specific EC2 instance family in a chosen AWS Region. Instance size, operating system, and tenancy can change within the commitment.

AWS also offers Database Savings Plans and SageMaker AI Savings Plans for eligible workloads. For a closer look at how database-specific commitments work, our complete guide to AWS Database Savings Plans breaks down coverage, flexibility, and how the discount is applied.

Savings Plans can provide savings of up to 72% compared with On-Demand pricing, depending on the plan and workload. They offer All Upfront, Partial Upfront, and No Upfront payment options. 

What Are AWS Reserved Instances?

AWS Reserved Instances provide discounted pricing when you commit to a specific instance configuration for a one- or three-year term. For EC2, the commitment can be associated with factors such as instance family, Region, operating system, tenancy, and Availability Zone, depending on the RI type. If you're comparing this against Savings Plans for the first time, understanding how FinOps principles apply to AWS commitments can help you make a more informed decision.

AWS offers two primary EC2 Reserved Instance types:

Standard Reserved Instances: Provide higher potential discounts but less flexibility. They are suited to workloads with stable and predictable configurations.

Convertible Reserved Instances: Allow you to exchange the reservation for another Convertible RI when your requirements change, providing greater flexibility than Standard RIs.

Reserved Instances can also have Regional or Zonal scope. Regional RIs provide broader usage flexibility within a Region, while Zonal RIs are associated with a specific Availability Zone and can provide capacity reservation benefits.

AWS Savings Plans vs. Reserved Instances

The most important differences are flexibility, type of commitment, service coverage, and capacity reservation. If you also want to weigh Spot Instances into the decision, the choice between Savings Plans, Reserved Instances, and Spot depends largely on workload stability, flexibility, and interruption tolerance. 

Both models can reduce costs compared with On-Demand pricing, but they are not interchangeable. AWS currently recommends Savings Plans as the easier and more flexible option for most EC2 compute workloads. 

When Should You Choose Savings Plans?

Choose Savings Plans when flexibility is more important than committing to a specific instance configuration.

Savings Plans are generally a better fit when:

• Your EC2 instance types or families may change.
• You expect to modernize or right-size infrastructure during the commitment period.
• Your workloads can move between AWS Regions.
• You use a combination of EC2, Fargate, and Lambda.
• You want discounts to automatically follow eligible changes in your infrastructure.
• You want to reduce the operational effort involved in managing commitments.

Compute Savings Plans are particularly useful for dynamic environments because their benefits can follow changes across instance families, Regions, operating systems, and supported compute services.

When Should You Choose Reserved Instances?

Choose Reserved Instances when your workload is stable enough that you can confidently commit to its configuration.

RIs can make sense when:

• You have predictable, long-running EC2 workloads.
• Your instance family and Region are unlikely to change.
• You need a Zonal RI for capacity reservation.
• You specifically need a commitment model that supports a service or configuration not covered by your chosen Savings Plan.
• A Standard RI's potential discount and configuration fit outweigh the flexibility of Savings Plans.

For database and other AWS services, check the service-specific commitment options before choosing an RI. AWS has expanded Savings Plans coverage, including Database Savings Plans for eligible database services, so the available options can vary by workload. Before committing, consider the common mistakes in AWS Reserved Instance buying, particularly around workload predictability, utilization, and commitment levels. 

How to Decide Between AWS Savings Plans and Reserved Instances

A simple decision framework is:

Choose Savings Plans if your usage is predictable but your infrastructure is likely to change.

Choose Reserved Instances if both your usage and instance configuration are highly predictable.

Choose a Zonal Reserved Instance if you specifically need capacity reservation in an Availability Zone.

Consider a combination if different parts of your environment have different levels of predictability.

Before making a commitment, analyze historical usage, utilization, growth patterns, planned migrations, and expected infrastructure changes. AWS Cost Explorer provides Savings Plans and Reserved Instance recommendations based on historical usage and can help evaluate an appropriate commitment level. For additional practical considerations, common questions about Savings Plans and Reserved Instances can help clarify how the two models work in real-world scenarios. 

What Are the Risks of AWS Commitment-Based Pricing?

The biggest risk is overcommitting. A one- or three-year commitment can become inefficient if your workload falls below the committed level or your infrastructure changes substantially.

Underutilized commitments can reduce the savings you expected to achieve, while undercommitting leaves part of your eligible usage at On-Demand rates. This is why commitment decisions should be based on actual usage patterns rather than short-term spikes or outdated infrastructure baselines. Understanding how AWS RI and Savings Plan wastage occurs can help teams identify and reduce overcommitment. Regularly reviewing AWS Reserved Instance commitment utilization and coverage can help identify unused commitments, changing workload patterns, and opportunities to adjust future purchases.

Conclusion

Choosing between AWS Reserved Instances and Savings Plans ultimately comes down to certainty versus flexibility. RIs can be effective for stable, predictable workloads with known configurations, while Savings Plans are generally better suited to environments where compute usage is steady but infrastructure can change.

As cloud environments evolve, continuously monitoring commitment utilization and aligning discounts with actual usage is essential. CloudKeeper can help organizations automate and optimize Reserved Instance and Savings Plan management, keeping commitments aligned with changing AWS usage and reducing the risk of wasted spend.

Frequently Asked Questions

• Are Savings Plans better than Reserved Instances?

  For many EC2 workloads, Savings Plans provide a better balance of savings and flexibility. Reserved Instances can still be appropriate when workloads are highly predictable, when a specific configuration is required, or when a Zonal RI's capacity reservation is needed. 

• Which is more flexible: Savings Plans or Reserved Instances?

  Savings Plans are generally more flexible. Compute Savings Plans can automatically apply to eligible EC2 usage across instance families, sizes, Regions, operating systems, and tenancies, as well as Fargate and Lambda.

• Can Savings Plans reserve EC2 capacity?

  No. Savings Plans provide discounted pricing but do not reserve physical EC2 capacity. If you require capacity in a specific Availability Zone, you can use an EC2 Capacity Reservation alongside an applicable pricing model.

• Can I use Savings Plans and Reserved Instances together?

  Yes. Savings Plans and Reserved Instances can coexist in an AWS environment, and AWS applies eligible discounts according to its pricing rules. Using a combination can make sense when different workloads have different stability, flexibility, or service requirements. If you're running both, automating AWS Reserved Instance and Savings Plan management can help keep mixed commitments aligned without relying on manual tracking.

• How long are AWS Savings Plans and Reserved Instances?

  Both Savings Plans and EC2 Reserved Instances generally offer one-year and three-year commitment terms.

• How do I know how much to commit?

  Use your historical usage and current utilization of eligible resources as a starting point. Then account for planned migrations, rightsizing, expected growth, and changes in instance types or services. The amount you commit should generally cover the baseline usage you expect to maintain throughout the commitment term, rather than temporary or uncertain demand. AWS Cost Explorer provides recommendations to help determine an appropriate commitment level.