AWS Savings Plans

Definition

AWS Savings Plans are flexible pricing commitments that provide significant discounts (up to 72%) on AWS compute and database services in exchange for agreeing to a consistent spend level over a 1 or 3-year term. Unlike Reserved Instances, Savings Plans apply across instance types, sizes, and regions, making them more flexible for evolving workloads.

Types of Savings Plans

Compute Savings Plans (most flexible)

• Apply to EC2, Fargate, and Lambda
• Discount regardless of instance family, size, region, OS, or tenancy
• Up to 66% savings vs on-demand
• Best for: Organizations with mixed or changing compute footprints

EC2 Instance Savings Plans (highest discount)

• Apply to a specific EC2 instance family in a specific region (e.g., M instances in us-east-1)
• Flexible across sizes (m5.large, m5.xlarge, etc.) and OS
• Up to 72% savings vs on-demand
• Best for: Stable workloads with a consistent instance family

SageMaker Savings Plans

• Apply to SageMaker ML compute (training, inference, notebooks)
• Up to 64% savings vs on-demand
• Best for: Organizations with regular SageMaker workloads

Database Savings Plans (launched 2025)

• Apply across RDS, Aurora, DynamoDB, ElastiCache, Neptune, and DocumentDB under a single commitment
• No need for separate Reserved Instances per database engine
• Up to 66% savings vs on-demand
• Best for: Organizations running multiple managed database services

How Savings Plans Work

You commit to spending a minimum amount per hour (e.g., $10/hour) for 1 or 3 years. AWS applies your Savings Plan to any eligible usage that matches your commitment level. Usage exceeding your commitment is charged at on-demand rates.

Example: You purchase a $10/hour Compute Savings Plan for 3 years. You can use:

• 4 x m5.large EC2 instances at $2.50/hour each
• 10 x t3.micro instances at $1/hour each
• A mix of Fargate and Lambda tasks totaling $10/hour
• Any combination up to your hourly commitment

AWS automatically applies Savings Plans to eligible usage — no reservation management required.

Common Mistakes

Mistake 1: Undercommitting to Savings Plans. If your baseline usage is $8/hour and you commit to $5/hour, you only capture the discount on $5 worth of usage.

Mistake 2: Purchasing Savings Plans without analyzing actual usage. Use Cost Explorer’s Savings Plans recommendations (covers the last 7, 30, or 60 days of usage) before committing.

Mistake 3: Ignoring Database Savings Plans. Organizations with RDS + DynamoDB + Aurora can replace multiple separate RIs with a single Database Savings Plan for simpler management and equivalent savings.

Related AWS Services

• EC2 Reserved Instances: For predictable usage of specific instance types (alternative to EC2 Instance Savings Plans)
• AWS Compute Optimizer: Analyzes usage patterns to recommend commitment level
• AWS Cost Explorer: Track Savings Plan coverage, utilization, and ROI

Related FactualMinds Content

• Modern cloud cost optimization strategies (2026)
• AWS Cost Allocation Tags: Complete Implementation Guide
• FinOps Consulting