INOTE

What are EC2 Instances Purchasing Options

1. On-Demand Instances

Pay for what you use:

  • Linux or Windows - billing per second, after the first minute
  • All other operating systems - billing per hour

Has the highest cost but no upfront payment

No long-term commitment

Recommended for short-term and un-interrupted workloads, where you can't predict how the application will behave


2. Reserved Instances

Up to 72% (this amount can change overtime) discount compared to On-demand

You reserve a specific instance attributes (Instance Type, Region,Tenancy, OS)

Reservation Period – 1 year (+discount) or 3 years (+++discount)

Payment Options

  • No Upfront (+)
  • Partial Upfront (++)
  • All Upfront (+++)

Reserved Instance’s Scope

  • Regional or Zonal (reserve capacity in an AZ)

Recommended for steady-state usage applications (like database)

You can buy and sell in the Reserved Instance Marketplace

2.1. Convertible Reserved Instance

Can change the EC2 instance type, instance family, OS, scope and tenancy

Less discount compare to Reserved Instances


3. Savings Plans

Get a discount based on long-term usage (up to 72% - same as Reserved Instances)

Commit to a certain type of usage ($10/hour for 1 or 3 years)

Usage beyond EC2 Savings Plans is billed at the On-Demand price

Locked to a specific instance family & AWS region (e.g., M5 in us-east-1)

Flexible across:

  • Instance Size (e.g., m5.xlarge, m5.2xlarge)
  • OS (e.g., Linux, Windows)
  • Tenancy (Host, Dedicated, Default)


4. Spot Instances

Can get a discount of up to 90% compared to On-demand

Instances that you can “lose” at any point of time if your max price is less than the current spot price

The MOST cost-efficient instances in AWS

Useful for workloads that are resilient to failure

  • Batch jobs
  • Data analysis
  • Image processing
  • Any distributed workloads
  • Workloads with a flexible start and end time

Not suitable for critical jobs or databases


5. Dedicated Hosts

A physical server with EC2 instance capacity fully dedicated to your use

Allows you address compliance requirements and use your existing server- bound software licenses (per-socket, per-core, pe—VM software licenses)

Purchasing Options:

  • On-demand – pay per second for active Dedicated Host
  • Reserved - 1 or 3 years (No Upfront,Partial Upfront,All Upfront)

The most expensive option

Useful for software that have complicated licensing model (BYOL – Bring Your Own License)

Or for companies that have strong regulatory or compliance needs


6. Dedicated Instances

Instances run on hardware that’s dedicated to you

May share hardware with other instances in same account

No control over instance placement (can move hardware after Stop / Start)


7. Capacity Reservations

Reserve On-Demand instances capacity in a specific AZ for any duration

You always have access to EC2 capacity when you need it

No time commitment (create/cancel anytime), no billing discounts

Combine with Regional Reserved Instances and Savings Plans to benefit from billing discounts

You’re charged at On-Demand rate whether you run instances or not

Suitable for short-term, uninterrupted workloads that needs to be in a specific AZ