Day 14 - Savings Plans

AWS Cost Optimisation Advent Calendar 2024

3 min read time

#aws #ec2 #fargate #ecs #lambda #sagemaker

Welcome to day 14 of the unofficial AWS Cost Optimisation Advent Calendar 2024, where every day we will be sharing new tips or tricks to help you optimise your cloud costs before Christmas 2024.

Today we will be talking about Savings Plans, one of the easiest ways to cut your costs if you know you are going to be on AWS for at least the next 12 months.

With Savings Plan, you commit to a certain amount of spend per hour for either 12 or 36 months, and in return you get a discount on your AWS bill. The discount is applied to the on-demand price of the resources you use, and can be up to 72%.

Any established business should be taking advantage of Savings Plans, as there really is a significant saving to be made.

These savings apply to EC2 instances, Fargate, Lambda and Sagemaker.

The difference between the 1 year and 3 year plans is the amount of discount you get.

A further discount can be applied by paying some or all upfront for the Savings Plan.

Typically paying upfront will give you an extra 5% or so discount.

Unfortunately RDS is not covered but we will talk about this in a future post.

Real World Example

Let's say your application is sitting behind a load balancer and you always have at least two t4g.large instances running and have been doing so for a while now.

You often have to scale this up during peak times but you never scale to less than 2 for redundancy reasons.

You could benefit from purchasing a savings plan for at least 2 x t4g.large instances.

In terms of costs, at the time of writing the on-demand price for a t4g.large is $0.0672 per hour. With a 1 year savings plan this would drop to $0.0485 per hour (a 28% saving) and on a 3 year plan it would drop to $0.0334 per hour (a 50% saving).

Annualised this is a saving of $327.624 and $592.176 respectively for those 2 instances.

How to get started

Purchasing a Savings Plan is very easy. You can do this via the AWS console by going to the Savings Plans section and clicking on Create Savings Plan.

You can purchase multiple Savings Plans so if you found you purchased too little you can "top it up" with a new Savings Plan.

Unfortunately you can't sell or change the terms of a Savings Plan which is why many companies will typically be quite conservative on their purchases.

The savings are prices on an hourly basis so you will want to look at the hourly pricing of the expected resources you will be using.

Once the Savings Plan is purchased it is applied automatically to your bill.

Conclusion

Savings Plans are an essential part of any cost optimisation strategy and should be reviewed regularly to see if there are any opportunities to add more.

We will talk in a future post about how these can be applied in tandem with Reserved Instances to maximise your savings.

That's it for today, see you tomorrow for another tip!

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