On-Demand Instances are essentially a “pay-as-you-go” solution that AWS offers. There are no upfront costs and users can use and stop using AWS services as they wish.
This option is ideal for scenarios that require low-cost and flexibility. For example, for testing and development, or for applications with short-term spiky, unpredictable workloads that cannot be interrupted. It’s also a good choice for users who need long-term workloads but prefer not to make upfront payments.
II. Savings Plans
The Savings Plans offer a significant discount on AWS compute usage. Users commit to a specific usage amount per hour for a term of one or three years. There are two types of Savings Plans: Compute Savings Plans and EC2 Instance Savings Plans.
Compute Savings Plans offer the biggest flexibility as they apply to any instance family, size, region, OS or tenancy. EC2 Instance plans, on the other hand, apply to a specific family within a particular region.
Savings plans are suitable for workloads with steady state usage and users who are willing to commit to using AWS services for 1 to 3 years.
III. Reserved Instances (RI)
Reserved Instances allow users to reserve a certain amount of compute capacity for 1 or 3 years in specific regions, in return for a lower cost compared to On-Demand instances.
They are best suited for predictable workloads where users have a good understanding of their application’s computational needs. They come in three offerings: Standard RIs, Convertible RIs, and Scheduled RIs, each providing a different level of flexibility and discount rate.
IV. Spot Instances
Spot Instances offer users to use the unused EC2 capacity in the AWS cloud at discount rates up to 90% compared to On-Demand pricing.
They are suitable for fault-tolerant and flexible applications. For instance, if you have time-flexible tasks that can be interrupted, consider using spot instances. Be aware that AWS can terminate Spot instances with a two-minute notice when they require the capacity back.
V. Dedicated Hosts
Dedicated Hosts are physical servers with EC2 instance capacity that are dedicated to a single customer’s use.
These are a good option for regulatory requirements that may not support multi-tenant virtualisation. They are also beneficial if you have existing server-bound software licenses.
Here is a reference table outlining each option in terms of pricing, flexibility and use-case:
| Compute Option | Pricing | Flexibility | Ideal Use-Case |
|---|---|---|---|
| On-Demand | High | High | Testing, development, short-term workloads |
| Savings Plan | Low | Low | Long-term steady workloads |
| Reserved Inst. | Low | Medium | Predictable workloads |
| Spot Inst. | Low | High | Time-flexible tasks |
| Dedi. Hosts | High | Low | Regulatory requirements |
In conclusion, AWS offers a variety of compute purchasing options to cater to every possible scenario. Keeping in mind the requirements of your workload, the financial commitment you are willing to make, and the flexibility you require, you can choose from these options to best fit your needs.
Remember, the ultimate goal is not just utilizing AWS resources efficiently, but to also do so in a cost-effective manner. Your understanding of these options, thus, will not only help you in real-life implementations but also during your AWS Certified Cloud Practitioner (CLF-C02) exam.
Practice Test
True or False: On-Demand Instances are a good choice for irregular applications that have predictable demand patterns.
- True
- False
Answer: False
Explanation: On-Demand Instances are recommended for applications with short-term, sporadic, or unpredictable workloads that cannot be interrupted.
Which of the following is NOT an advantage of Reserved Instances in AWS?
- a) Significant discount compared to On-Demand Instances
- b) Capacity assurance in specific Availability Zone
- c) Pay for what you use, just like with On-Demand Instances
- d) Ability to change the instance type during the term
Answer: c) Pay for what you use, just like with On-Demand Instances.
Explanation: With Reserved Instances, you pay upfront for a commitment for one or three years, unlike On-Demand Instances where you pay for what you use.
Single Select: For applications with a flexible start and completion time, which of the following compute purchasing options is a suitable choice?
- a) On-Demand Instances
- b) Reserved Instances
- c) Spot Instances
- d) Dedicated Instances
Answer: c) Spot Instances
Explanation: Spot Instances are typically good fit for computations that can be interrupted and flexible about when they run.
True or False: Spot Instances are more expensive compared to On-Demand Instances.
- True
- False
Answer: False
Explanation: Spot Instances offer up to 90% off the price of On-Demand Instances because they utilize spare AWS computing capacity.
Multiple Select: For which of the following use cases should you primarily consider using Dedicated Instances?
- a) Regulatory requirements that do not allow sharing of hardware
- b) Applications that do not require full control over the underlying physical hardware
- c) Applications with a need for high performance computing resources
- d) Workloads that require consistent performance
Answer: a) Regulatory requirements that do not allow sharing of hardware, and d) Workloads that require consistent performance
Explanation: Dedicated Instances are physically isolated from instances belonging to other AWS accounts and are dedicated to single customer.
True or False: Reserved Instances can be sold on the AWS Marketplace.
- True
- False
Answer: True
Explanation: AWS Reserved Instances can be sold to different accounts through the AWS Marketplace.
In pricing models, what does the “Free Tier” offer by AWS include?
- a) Everything for free
- b) Complete access to AWS services for an unlimited time
- c) Free usage of some AWS services for a one-year period
- d) Free usage of all AWS services for a one-year period
Answer: c) Free usage of some AWS services for a one-year period
Explanation: AWS offers a Free Tier, which includes a limited amount of free usage for certain services for a one-year period.
True or False: On-Demand Instances require long-term commitments.
- True
- False
Answer: False
Explanation: On-Demand Instances require no long-term commitments or upfront payments.
What is the main purpose of AWS Savings Plans?
- a) To reserve capacity in particular Availability Zones
- b) To reduce costs on regular, predictable usage
- c) To purchase capacity for peak workloads
- d) To give free access to AWS services
Answer: b) To reduce costs on regular, predictable usage
Explanation: AWS Savings Plans offer significant savings on AWS compute usage by committing to a consistent amount of usage for one or three years.
True or False: With Dedicated Hosts, you can use your existing server-bound software licenses.
- True
- False
Answer: True
Explanation: AWS Dedicated Hosts are physical servers dedicated to your use, and can help you reduce costs by allowing you to use your existing server-bound software licenses.
Interview Questions
What are some of the benefits expected from On-Demand computing resources?
On-Demand computing resources allow for flexibility as it does not require a long-term commitment. It also provides the freedom to increase or decrease provisioned capacity anytime based on business needs.
Can you mention one disadvantage of making use of On-Demand Instances?
Yes, while they offer high flexibility, On-Demand Instances can be more expensive than reserved instances in the long term.
When is it suitable to use Reserved Instances?
Reserved Instances are suitable when the workload is steady and predictable. They provide discounts on hourly charges and have capacity reservations.
What does the term “Spot Instances” refer to in AWS?
Spot Instances refer to the unused EC2 computer capacity in the AWS cloud, which is available at up to a 90% discount compared to On-Demand prices.
What type of workloads are best suited for Spot Instances?
Spot Instances are typically best suited for workloads that are flexible to run, such as data analysis, batch jobs, background processing, and optional tasks.
How would you define Savings Plans in AWS?
In AWS, Savings Plans are a flexible pricing model that offer significant savings on AWS usage, much like Reserved Instances. Customers can commit to a consistent amount of usage (e.g., $10/hour) over 1 or 3 years to receive discounted prices.
How can you determine the best purchasing option?
The best purchasing option can be determined by understanding the nature of your workloads. Consider factors such as flexibility, costs, commitment periods, and workload characteristics while making a selection.
What is the main factor that differentiates On-Demand Instances from Reserved and Spot Instances?
On-Demand Instances do not require upfront commitment whereas Reserved and Spot Instances do. They are priced for each hour or second that they are running.
What is the advantage of AWS Savings Plans in comparison to Reserved Instances?
Savings Plans offer more flexibility in terms of compute usage. Unlike Reserved Instances which are restricted to specific instance families, sizes, and regions, Savings Plans apply to any instance family, size, operational system, or AWS region.
How are Spot Instances prioritized in AWS?
AWS offers Spot instances to the highest bidder. When the compute demand increases or when the bid price is lower than the price AWS sets, Spot Instances are reclaimed with two-minute notifications.
What is the most cost-effective option for short-term, spiky, or unpredictable workloads that cannot be interrupted?
The most cost-effective option for short-term, spiky, or unpredictable workloads that cannot be interrupted is typically On-Demand Instances.
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