Amazon EC2 Reserved Instances

Amazon EC2 Reserved Instances enable you to maintain the benefits of elastic computing while lowering costs and reserving capacity. With Reserved Instances you pay a low, one-time fee and in turn receive a significant discount on the hourly charge for that instance. Reserved Instances can provide substantial savings over owning your own hardware or running only On-Demand instances as well as help assure that the capacity you need is available to you when required.

Feature Highlights

• Cost Effective: Reserved Instances save you up to 65% over On-Demand rates.
• Flexible: Reserved Instances provide you the ability to maximize your level of savings by purchasing the Reserved Instance that meets your business’s needs.
• Term: AWS offers Reserved Instances for 1 or 3 year terms. Reserved Instance Marketplace Sellers also offer Reserved Instances that have all the same operating qualities as AWS’s Reserved Instances, but terms that can range from 1 month to 36 months (depending on available selection).
• Utilization: Reserved Instances are available in three different types: Light, Medium, and Heavy Utilization that enable you to balance the amount you pay upfront with your effective hourly price.
• Region: Reserved Instances are available in all AWS regions. Reserved Instances are also available in Amazon VPC and Dedicated Instances.
• Operating System: Reserved Instances can be purchased for Amazon EC2 running Linux/UNIX, SUSE Linux, Red Hat Enterprise Linux, Microsoft Windows Server, and Microsoft SQL Server platforms.
• Scale with your Business: Reserved Instances are eligible for volume discounts, which can save you an additional 10% when you spend more than $250,000 on Reserved Instances or an additional 20% when you spend more than $2,000,000 on Reserved Instances. Customers who spend more than $5,000,000 on Reserved Instances should contact us for additional discounts.
• Reliable: Reserved Instances provide a capacity reservation so that you can have confidence in your ability to launch the number of instances you have reserved when you need them.
• Easy to Use: Reserved Instances are easy to use and require no change to how you use EC2. When computing your bill, our system will automatically apply Reserved Instance rates first to minimize your costs. An instance hour will only be charged at the On-Demand rate when your total quantity of instances running that hour exceeds the number of applicable Reserved Instances you own.
• Marketplace Available: The Reserved Instance Marketplace provides you with the opportunity to sell Reserved Instances if your needs change (i.e. want to move instances to a new AWS Region, change to a new instance type, or sell capacity for projects that end before your Reserved Instance term expires).

Reserved Instance Types

Reserved Instances (“RIs”) allow you to make a low, one-time payment to reserve instance capacity and further reduce your on-going Amazon EC2 costs. There are multiple Reserved Instance types shown below that enable you to balance the amount you pay upfront with your effective hourly price:

• Light Utilization RIs – Light Utilization RIs offer the lowest upfront payment of all of the Reserved Instance types. Along with this low upfront payment, you’ll receive a significantly discounted hourly usage fee. Light Utilization RIs allow you to turn off your instance at any point and not pay the hourly fee. Light Utilization RIs are ideal for periodic workloads that only run a couple of hours a day, a few days per week, or very sporadically (like Disaster Recovery where they hardly ever are needed, but when they are, you must be sure you have the reserved capacity to handle). Using Light Utilization RIs, you can save up to 30% for a 1-year term and 49% for a 3-year term vs. running On- Demand Instances. The break-even point for a Light Utilization Linux RI (vs. On-Demand Instances) is 28% for a 1-year term or 11% of a 3-year term. If you expect to use your instance more than that, an RI will save you money.
• Medium Utilization RIs – Medium Utilization RIs are the exact same Reserved Instances that EC2 has offered for the last several years. They have a higher upfront payment than Light Utilization RIs, but a much lower hourly usage fee. Medium Utilization RIs allow you to turn off your instance at any point and not pay the hourly fee. Medium Utilization RIs are best suited for workloads that run most of the time, but have some variability in usage (like web server traffic where demand may increase or decrease throughout the year). Using Medium Utilization RIs, you can save up to 39% for a 1-year term and 59% for a 3-year term vs. running On-Demand Instances. The break-even point for a Medium Utilization Linux RI (vs. Light Utilization Reserved Instances) is 41% for a 1-year term or 19% of a 3-year term. If you expect to use your instance more than that, an RI will save you money.
• Heavy Utilization RIs – Heavy Utilization RIs offer the most absolute savings of any Reserved Instance type. They’re most appropriate for steady-state workloads where you’re willing to commit to always running these instances in exchange for our lowest hourly usage fee. With this RI, you pay a little higher upfront payment than Medium Utilization RIs, a significantly lower hourly usage fee, and you’re charged that lower hourly rate for every hour in the Reserved Instance term you purchase. Using Heavy Utilization RIs, you can save up to 45% for a 1-year term and 65% for a 3-year term vs. running On-Demand Instances. The break-even point for a Heavy Utilization Linux RIs (vs. Medium Utilization Reserved Instances) is 56% for a 1-year term or 35% of a 3-year term. If you expect to use your instance more than that, an RI will save you money.

To illustrate when to choose each Reserved Instance option, the table below shows the possible savings for Light, Medium, and Heavy Utilization Reserved Instances over On-Demand rates. The higher your utilization over your Reserved Instance term, the more savings Reserved Instances provide.

Another way to view the utilization rates above is in terms of aggregate usage. If you purchase a 3-year term Medium Reserved Instance, you need only run that instance for a total of 7.4 months over the course of the 3-year term (19% of the term) for your costs to equal those of On- Demand. Any usage beyond this amount incrementally increases your savings.

Reserved Instance Pricing

Reserved Instances

Reserved Instances give you the option to make a low, one-time payment for each instance you want to reserve and in turn receive a significant discount on the hourly charge for that instance. There are three Reserved Instance types (Light, Medium, and Heavy Utilization Reserved Instances) that enable you to balance the amount you pay upfront with your effective hourly price.

The following tables display the Reserved Instance Prices available directly from AWS. In addition to Reserved Instances for Linux/UNIX and Windows operating systems specified below, we also offer Reserved Instances for Amazon EC2 running SUSE Linux Enterprise Server, Amazon EC2 running Red Hat Enterprise Linux, and Amazon EC2 running Microsoft SQL Server. Dedicated Reserved Instances are also available.

Reserved Instances can be purchased directly from AWS for 1 or 3 year terms. Using the Reserved Instance Marketplace, you have the flexibility to purchase Reserved Instances from AWS Reserved Instance Marketplace Sellers for terms ranging between 1 month to 36 months (depending on available selection). In either case, the one-time fee per instance is non-refundable.

Light and Medium Utilization Reserved Instances also are billed by the instance-hour for the time that instances are in a running state; if you do not run the instance in an hour, there is zero usage charge. Partial instance-hours consumed are billed as full hours. Heavy Utilization Reserved Instances are billed for every hour during the entire Reserved Instance term (which means you’re charged the hourly fee regardless of whether any usage has occurred during an hour).

If Microsoft or Red Hat chooses to increase the license fees that it charges for Windows or Red Hat Enterprise Linux, we may correspondingly increase the per-hour usage rate for previously purchased Reserved Instances with Windows or Red Hat Enterprise Linux. The initial one-time payment for a Reserved Instance will be unaffected in this situation. Any such changes for Windows would be made between Dec 1 – Jan 31, and with at least 30 days’ notice. Any such changes for Red Hat Enterprise Linux would be made at least 30 days’ notice. If the per-hour usage rate does increase, you may continue to use your Reserved Instance with Windows or Red Hat Enterprise Linux with the new per-hour usage rate, convert your Reserved Instance with Windows or Red Hat Enterprise Linux to a Reserved Instance with Linux/UNIX, or request a pro rata refund of the upfront fee you paid for the Reserved Instance with Windows or Red Hat Enterprise Linux.

Reserved Instances are available for Linux/UNIX, Windows, Red Hat Enterprise Linux, and SUSE Linux Enterprise operating systems. You can also optionally reserve instances in Amazon VPC at the same prices as shown above. Click here to learn more about Reserved Instances.

Reserved Instance Volume Discounts

When you have purchased a sufficient number of Reserved Instances in an AWS Region, you will automatically receive discounts on your upfront fees and usage fees for future purchases of Reserved Instances in that AWS Region. Reserved Instance Tiers are determined based on the total list price (non-discounted price) of upfront fees for the active Reserved Instances you have per AWS Region. It is important to note that Reserved Instance Tiers do not apply to Reserved Instances purchased from the Reserved Instance Marketplace. A complete list of the Reserved Instance Tiers is shown below:

For example, as soon as you have active Reserved Instances with total list price of upfront fees totaling more than $250,000 in a single AWS Region, you will automatically receive a 10% discount on both upfront and hourly fees for all future Reserved Instance purchases in that AWS Region, and those discounts will continue to apply to new Reserved Instances as long as you continue to qualify for the discount tier.

To illustrate, let's assume you currently have $200,000 worth of active Reserved Instances in us-east-1. You purchase 75 Reserved Instances at $1000 each. That's a total of $75,000. The first $50,000 of this purchase would be discounted at 0 percent. The remaining $25,000 of your purchase will be discounted by 10 percent, so you will only be charged $22,500 for it, and you will pay discounted hourly fees on those Reserved Instances.

To learn more about Reserved Instance Tiers, please visit the “Understanding Reserved Instance Tiers” portion of the Amazon EC2 User Guide.

Comparing Reserved Instances to Doing It Yourself

With do-it-yourself options such as collocation or managed hosting, you know that your servers are always available. Reserved Instances provide the same capacity and cost savings, but with greater flexibility and less effort.

Direct costs of do-it-yourself solutions include hardware, facility fees, and maintenance. Doing it yourself requires dedicated support resources within your organization, which result in additional indirect costs and distraction to your core business. When you do-it-yourself, you only have access to a set number of physical servers; any hardware problems result in costly repairs and lost time. Additionally, if your needs change you are stuck with costly hardware that may sit idle or underutilized.

Reserved Instances transfer responsibility for these support activities to Amazon EC2, leaving you free to focus on your business. Reserved Instances allow you to avoid recurring costs by turning off instances when you are not using them. In the event of a hardware issue, you can re-launch your instance immediately without additional costs. With Reserved Instances you maintain flexibility because you have the option to sell your Reserved Instance on the Reserved Instance Marketplace if your needs change and either receive cash or purchase an alternative Reserved Instance that better meets your needs.

The chart below shows a comparison between the estimated annual costs of doing it yourself, Heavy Utilization Reserved Instances and On-Demand Instances for a customer running 35 m1.small and 10 m1.large Linux/UNIX instances at steady state for 3 years.

For information, tools, and resources to compare the costs of Amazon Web Services with IT infrastructure alternatives please visit the AWS Economics Center.

Reserved Instance Marketplace

The Reserved Instance Marketplace allows you to sell your Amazon EC2 Reserved Instances to other businesses and organizations if your needs change (e.g. you want to move instances to a new AWS Region, change to a new instance type, or sell capacity for projects that end before the term expires). You can also browse the Reserved Instance Marketplace to find an even wider selection of Reserved Instance term lengths and pricing options sold by other AWS customers. Amazon EC2 Instances purchased on the Reserved Instance Marketplace offer the same capacity reservations as Reserved Instances purchased directly from AWS.

The Reserved Instance Marketplace provides a number of benefits that make it easy to buy and sell Reserved Instances:

• Set Your Own Price. You can choose the upfront price you set for the Reserved Instances you sell, and automatically reduce that upfront price over subsequent months.
• Money Back. Once your Reserved Instance sells, you will receive an ACH wire transfer from Amazon Web Services to the account specified when you registered for the Reserved Instance Marketplace.
• Greater Reserved Instance Selection. Businesses can now shop the Reserved Instance Marketplace to purchase Reserved Instances outside the standard one-year and three-year term lengths that AWS offers.

Each Reserved Instance sold on the Amazon EC2 Reserved Instance Marketplace will be charged a service fee of 12% of the total upfront price. Reserved Instances can be sold after they have been active for at least 30 days and once AWS has received the upfront payment.

For more detailed information on how to buy and sell Reserved Instances, please see How to Purchase Reserved Instances and the Reserved Instance Marketplace pages.