Spot Instances are a cost-effective choice if you can tolerate interruptions and your applications are fault-tolerant. Spot Instances provide you with access to unused EC2 capacity at up to 90% off the On-Demand prices.
AWS Spot Instances provide flexibility to run applications as long as needed, but AWS can reclaim your Spot Instances with a 2-minute warning when AWS needs the capacity back.
For example, if you are managing a batch job that takes an hour to complete, and it can be interrupted without consequences, a Spot Instance could be a cost-effective choice.
2. Reserved Instances
Reserved Instances (RIs) provide a capacity reservation and offer a significant discount (up to 75%) compared to On-Demand pricing and provide a capacity reservation when used in a specific Availability Zone.
RIs are best suited for steady-state use cases where the workload is predictable and does not vary in time.
There are two types for RIs:
- Standard RIs: These provide the most significant discount (up to 75% off On-Demand) and are best for steady-state usage.
- Convertible RIs: These provide a discount (up to 54% off On-Demand) and the capability to change the attributes of the RI as long as the exchange results in the creation of Reserved Instances of equal or greater value.
For example, if your company has a predictable workload, you could purchase a Reserved Instance to ensure you always have access to compute capacity.
3. Savings Plans
Savings Plans are a flexible pricing model that provides savings of up to 72% on AWS compute usage. This pricing model offers lower prices on Amazon EC2 instances usage, regardless of instance family, size, OS, region, or tenancy, and also applies to AWS Fargate and AWS Lambda usage.
There are two types of Savings Plans:
- Compute Savings Plans: These provide the most flexibility and help to maximize savings. They automatically apply to EC2 instance usage regardless of instance family, size, AZ, region, OS, or tenancy.
- EC2 Instance Savings Plans: These apply to a specific instance family within a region and provide the largest discount.
For example, if your company has a flexible load that can vary over time, a Saving Plan would be a good fit because of its flexibility and high cost savings.
Here is a quick comparison of the purchasing options:
| Spot Instances | Reserved Instances | Savings Plans | |
| Best Suited For | Interruptible workloads and applications that are fault-tolerant | Steady-state and predictable workloads | Flexible workloads that vary over time |
| Pricing | Up to 90% off the on-demand price | Up to 75% off the on-demand price | Up to 72% off the on-demand price |
| Commitment | None | 1 or 3 years | 1 or 3 years |
In conclusion, the type of AWS purchasing option you select entirely depends on individual case scenarios. Factors such as workload, application type, and cost savings should influence the choice of purchasing options. Remember, a combination of purchasing models can also be used based on different workloads within the same project. Understanding these different purchasing types and their best use cases will not only secure easier navigation around AWS resource cost optimization but also assist in passing the AWS Certified Solutions Architect – Associate (SAA-C03) exam successfully.
Practice Test
True/False: Spot Instances are the most expensive computing power that AWS provides.
Answer: False.
Explanation: Spot Instances offer unused EC2 instances at steep discounts relative to On-Demand pricing and are therefore typically the cheapest option.
In the Reserved Instances purchasing option, instances are always available and can be used for any duration of time.
Answer: True.
Explanation: 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.
Which AWS purchasing option does not require a long-term commitment?
- a) Reserved Instances
- b) Spot Instances
- c) Savings Plans
Answer: b) Spot Instances.
Explanation: Spot Instances are billed per second, with no long-term commitment, while Reserved Instances and Saving Plans require commitment for 1 to 3 years.
True/False: Savings Plans allow you to use instances across any region.
Answer: True.
Explanation: AWS Compute Savings Plans offer flexibility to use instance usage across any region, instance family, size, OS, tenancy, or even across EC2 and Fargate.
Which AWS purchasing option provides the highest discount compared to On-Demand pricing?
- a) Spot Instances
- b) Reserved Instances
- c) Savings Plans
Answer: a) Spot Instances.
Explanation: Spot Instances provide steep discounts — up to 90% of the On-Demand price.
True/False: A Reserved Instance is a physical server dedicated for your use.
Answer: False.
Explanation: A Reserved Instance is not a physical server, it is a billing discount applied to the use of On-Demand Instances in your account.
With Savings Plans, users commit to ___ of usage.
- a) Minutes
- b) Hours
- c) Years
Answer: b) Hours.
Explanation: With Savings Plans, users commit to a consistent amount of usage (measured in $/hour) for a 1 or 3 year term.
Under the Reserved Instances purchasing option, reservations apply to specific instance types.
Answer: True.
Explanation: When you buy a Reserved Instance, the reservation is tied to a specific instance type within a region.
True/False: Savings Plans cover usage across Amazon EC2, AWS Lambda, and AWS Fargate.
Answer: True.
Explanation: AWS offers two types of Savings Plans; Compute savings plans and EC2 Instance Savings plans. The former covers usage across Amazon EC2, AWS Lambda, and AWS Fargate.
Spot Instances can be terminated by AWS at any time.
Answer: True.
Explanation: With Spot Instances, if your bid is lower than the current Spot price or if AWS needs the capacity back, your Spot Instance could be terminated with short notice.
With Spot Instances, you can save up to ___ of the On-Demand price.
- a) 10%
- b) 50%
- c) 90%
Answer: c) 90%.
Explanation: Spot Instances provide steep discounts, up to 90% off compared to On-Demand pricing.
True/False: Savings Plans provide a discount up to 72% compared to On-Demand pricing.
Answer: True.
Explanation: Savings Plans offer significant savings over On-Demand, similar to Reserved Instances, up to 72%, depending on the terms of the Savings Plan.
True/False: Reserved Instances require upfront payment.
Answer: False.
Explanation: Reserved instances can be purchased with three payment options: All Upfront, Partial Upfront, and No Upfront.
What AWS purchasing option grants capacity reservation?
- a) Spot Instances
- b) Reserved Instances
- c) Savings Plans
Answer: b) Reserved Instances.
Explanation: Reserved instances provide a capacity reservation so that you can have confidence in your ability to launch the number of instances you have reserved.
True/False: Spot Instances can be interrupted by AWS with a 2-minute warning.
Answer: True.
Explanation: AWS can terminate Spot Instances with a 2-minute warning when the Spot Price is more than the customer’s maximum price, or when there is not enough unused EC2 capacity to meet the demand.
Interview Questions
What are AWS Spot Instances?
AWS Spot Instances are unused EC2 instances available at up to a 90% discount compared to On-Demand prices. They allow users to optimize costs by unutilizing spare capacity.
What is the primary advantage of using AWS Reserved Instances?
The primary advantage of using AWS Reserved Instances is cost savings. It provides a significant discount (up to 75%) compared to On-Demand instance pricing.
What are AWS Savings Plans?
AWS Savings Plan is a flexible pricing model that offers significant savings on AWS usage, similar to Reserved Instances, but with greater flexibility.
Can an AWS savings plan be applied to instances in any region?
Yes, AWS Savings Plans offer the flexibility to change region, instance family, operating system, and tenancy.
When should a user consider purchasing Spot Instances?
A user should consider purchasing Spot Instances when they have flexible start and end times, applications that are feasible at large scale and/or built to be fault-tolerant.
How long is the term for Standard Reserved Instances?
The term for Standard Reserved Instances is either one or three years.
Can Reserved Instances be sold on the Reserved Instance Marketplace?
Yes, Reserved Instances can be sold on the Reserved Instance Marketplace.
What are the pricing models for purchasing Reserved Instances?
The pricing models for purchasing Reserved Instances include All Upfront, Partial Upfront, and No Upfront.
What is the difference between a Convertible and Standard Reserved Instance in AWS?
Convertible Reserved Instances offer the flexibility to change the instance type, whereas Standard Reserved Instances do not but offer more savings.
Can a customer convert AWS Standard Reserved Instances to Convertible Reserved Instances?
No, AWS doesn’t support the conversion of Standard Reserved Instances to Convertible Reserved Instances.
How does AWS charge for partial Savings Plan usage?
AWS automatically applies the savings benefit to all eligible usage up to your commitment. Any usage beyond your commitment is billed at regular On-Demand rates.
If the Spot Instance is terminated by Amazon EC2, will customers be charged for a partial hour usage?
No, if AWS terminates the Spot Instance, customers are not billed for any usage during that hour.
Can AWS Savings Plans cover Lambda usage?
Yes, the Compute Savings Plan automatically applies to Lambda usage as well as EC2 Instance usage.
How frequently can AWS Spot Instance prices change?
AWS Spot Instance prices change infrequently based on long-term trends in supply and demand, but they can change at any time.
How are EC2 Reserved Instances sold?
EC2 Reserved Instances are sold through All Upfront, Partial Upfront, and No Upfront, each with different payment options and potential cost savings.
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