Day 15 - Reserved Instances

AWS Cost Optimisation Advent Calendar 2024

4 min read time

#aws #ec2 #rds

Welcome to day 15 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 are talking about Reserved Instances.

This is a follow up to yesterday's post on Savings Plans as there are many similarities.

With Reserved Instances, you commit to a specific instance configuration for 1 or 3 years in exchange for a significant discount compared to On-Demand pricing.

Reserved Instances are a great way to save money if you have predictable usage and are planning on sticking with AWS for a while.

How does this differ from Savings Plans?

There are a number of key differences between Reserved Instances and Savings Plans. The key points we would like to highlight are:

1. Instance Flexibility: With Reserved Instances, you are locked into a specific instance size and family. With Savings Plans, you can change the instance size as long as the underlying resources are of equal or lesser value.
2. RDS Support: Reserved Instances can be used for RDS instances, whereas Savings Plans cannot.
3. Reserved Instance Marketplace: Reserved Instances can be sold on the AWS Reserved Instance Marketplace if you no longer need them, whereas a Savings Plan cannot be sold or terminated in most cases.

With that in mind the times you may want to choose Reserved Instances over Savings Plans are if you are looking for a shorter term commitment, or you want to take advantage of the savings on your RDS instances.

Typically a database instance is a long term commitment being the core of many businesses.

Convertible vs Standard Reserved Instances

Some terminology that might be useful to know is the difference between Convertible and Standard Reserved Instances.

• Standard Reserved Instances: These are the most common type of Reserved Instances. They are locked into a specific instance size and family for the duration of the term.
• Convertible Reserved Instances: These are more flexible than Standard Reserved Instances. You can change the instance size and family as long as the underlying resources are of equal or lesser value.

Usually Convertible Reserved Instances are more expensive than Standard Reserved Instances.

Pricing Differences

The pricing of Reserved Instances is more complex than Savings Plans. There are mutiple prices available on the marketplace and if the seller is not AWS there are often variations in the price or in some cases fees.

The price will also change if you are willing to pay all upfront or partially upfront along with the term length (1 or 3 years).

In some cases Reserved Instances will be cheaper than Savings Plans and other times not.

It is worth shopping around at the point you are going to purchase a Savings Plan to see what is available on the Reserved Instance market. A common savings strategy is to combine Savings Plans with Reserved Instances.

What if your needs change?

The beauty of the Reserved Instances is that you can sell them on if you no longer need them, provided there are buyers in the market of course.

To sell your instance you would register on the AWS Reserved Instance Marketplace as a seller and list them there.

If you have a Convertible Reserved Instance you can also modify the instance to a smaller size or a different family of equal value.

Conclusion

Reserved Instances can be a great way to save money, particularly if you have long running database servers.

As noted many organisations combine Reserved instances with Savings Plans to maximise their savings.

That said, it is also worth noting that the general consensus is that AWS is moving towards a world where Savings Plans are the preferred method of saving money and Reserved Instances may get deprecated in the future, so the time to take advantage of this might be limited.

That's all for today, see you tomorrow for the next tip!

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