AWS Savings Plans – Amazon Changes the Rules of the Game

Amazon announced today a dramatic change in the commitment they will require from their customers in exchange for significant discounts. The new method is called AWS Saving Plans.

To fully understand how dramatic this statement is, we will briefly review existing payment methods and the current level of commitment that is required.

When using EC2 (the most popular cloud computing service), there are three payment methods:

  1. On Demand – Pay based on actual usage, no guarantees, charged per second of usage. 
  2. Spot – “Amazon Spare Capacity” users are using regular Amazon servers that were not be utilized and Spot users receive up to 90% off, the downside is that Amazon can request the server back with a 2 minute warning. 
  3. RI – User commits to Amazon to use certain servers for set time periods (up to 3 years in advance) and in exchange they receive a 75% discount. 

Amazon’s announcement today applies to RI. There are two different types of RI that are addressed in the announcement:

  1. Standard
  2. Convertible

The significant difference between these two RIs is the flexibility they provide when it comes to making changes.

When you purchase RI, you must commit to Amazon that you will use a certain amount of space over a set time period (year / three years), hosted on servers in particular regions, with a specific operating system and within a certain class (along with a few other specific requirements).

The ability to make changes to Standard RI is extremely limited in comparison to convertible. Below is a chart that shows what changes can be made to the different kids of RI. 

RI standard vs convertible
RI standard vs convertible (taken from AWS Documentation)

An important point to understand about RI, is that you are not actually buying servers, but rather buying a discounted coupon that is automatically applied on the servers that you are using according to the options and settings that you have purchased.

For example,  if you buy an RI m5.large with a Linux operating system, in the region of North Virginia, you will pay anyway the cost after your discount, assuming the server with these features is already available and “paid”  you would not be charged any additional fees. 

The RI world is complex and contains many details, in order to understand it better, we recommend reading the following blog post

Amazon announced today its “Saving Plans”. These Savings Plans now offer the opportunity to purchase hourly computing cost commitment, without committing to the region, operating system, or even the type of server you will be running. You need to only guarantee that your Computing costs at a certain time will be at least X $ and in exchange for this commitment you will now receive similar discounts to RI.

These discounts will be applied automatically to the running servers and there are no multiple discounts(Savings plan and RI). 

In order to truly understand the hourly usage costs of “Computing” for a specific resource, it is highly recommended that you use a system that can show you your costs broken down by hour and can demonstrate what you are getting for what you are paying. 

The illustration was taken from the Pileus system

To sum up, it certainly seems that Amazon has decided to change the rules of the game. Changes in the AWS world often calls for educated recommendations. Our recommendation is to use a system to manage your AWS that is both up to date and knows how to customize and adapt its recommendations to the individual client’s needs. 

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