AWS Glossary
Reserved Instances vs Savings Plans
Comparison of AWS Reserved Instances and Savings Plans pricing models for cost optimization.
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Summary
Comparison of AWS Reserved Instances and Savings Plans pricing models for cost optimization.
Key Facts
- • Comparison of AWS Reserved Instances and Savings Plans pricing models for cost optimization
- • ## Definition AWS offers two commitment-based pricing models to reduce costs: Reserved Instances (RIs) and Savings Plans
- • Both require upfront commitment (1 or 3 years) in exchange for significant discounts (up to 72%) compared to on-demand pricing
- • If you only use 50% of capacity, you're paying for the other 50%
- • **Mistake 2:** Buying RIs that won't be used in 2 years
Entity Definitions
- Lambda
- Lambda is an AWS service relevant to reserved instances vs savings plans.
- EC2
- EC2 is an AWS service relevant to reserved instances vs savings plans.
- RDS
- RDS is an AWS service relevant to reserved instances vs savings plans.
- DynamoDB
- DynamoDB is an AWS service relevant to reserved instances vs savings plans.
- ElastiCache
- ElastiCache is an AWS service relevant to reserved instances vs savings plans.
- serverless
- serverless is a cloud computing concept relevant to reserved instances vs savings plans.
- cost optimization
- cost optimization is a cloud computing concept relevant to reserved instances vs savings plans.
Related Content
- FINOPS CONSULTING — Related service
- AWS CLOUD COST OPTIMIZATION SERVICES — Related service
Definition
AWS offers two commitment-based pricing models to reduce costs: Reserved Instances (RIs) and Savings Plans. Both require upfront commitment (1 or 3 years) in exchange for significant discounts (up to 72%) compared to on-demand pricing.
Reserved Instances (RIs)
How They Work:
- Commit to specific instance type, size, region, OS for 1 or 3 years
- Available for EC2, RDS, ElastiCache, Redshift, DynamoDB
- Three types: Standard (best discount), Convertible (flexible type change), Scheduled (predictable usage windows)
Best For:
- Predictable, stable workloads (databases, web servers, batch jobs)
- Single instance types that won’t change
- Cost savings when utilization is consistent
Limitations:
- Locked into instance type; changing causes unused RI cost
- No benefit if workload ends before commitment period
- Upfront payment required (some options allow partial/no upfront)
Savings Plans
How They Work:
- Commit to spend on compute (EC2, Fargate, Lambda) or database (RDS, DynamoDB) for 1 or 3 years
- Flexibility to change instance type, size, region, OS within family
- Applies across instances, containers, and serverless
- Only pay upfront; receive discounted hourly rate
Best For:
- Variable workloads that shift between instance types
- Organizations that consolidate compute (EC2 + Fargate + Lambda)
- Multi-region or multi-family usage patterns
- Faster migration to newer instance types
Advantages:
- Flexibility to optimize as you go
- Apply across compute services (not locked to one service)
- Generally better ROI for mixed workloads
Comparison Table
| Feature | Reserved Instance | Savings Plan |
|---|---|---|
| Commitment | Instance-specific | Spend-based |
| Flexibility | Limited (Convertible costs extra) | High (type/size/region flexible) |
| Services | EC2, RDS, ElastiCache, Redshift, DynamoDB | EC2, Fargate, Lambda, RDS, DynamoDB |
| Discount | Up to 72% (3-year standard) | Up to 72% (3-year) |
| Refund | No refund if unused | Partial refund available |
| Best for | Stable, single-instance workloads | Mixed, evolving workloads |
Common Mistakes
Mistake 1: Buying RIs without analyzing utilization. If you only use 50% of capacity, you’re paying for the other 50%.
Mistake 2: Buying RIs that won’t be used in 2 years. Cloud workloads evolve; lock in conservatively.
Mistake 3: Ignoring Savings Plans for EC2. Many orgs default to RIs without considering the flexibility benefit.
Related AWS Services
- Reserved Instance Marketplace (buy/sell unused RIs)
- AWS Compute Optimizer (right-sizing recommendations)
- AWS Trusted Advisor (commitment utilization analysis)
Related FactualMinds Content
Related Services
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