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AWS Savings Plans vs Reserved Instances

TL;DR: AWS Savings Plans are inherently more flexible than Reserved Instances. Increasingly more customers choose Savings Plans to get the same savings rates as Reserved Instances but not get locked into a specific instance type. Even Amazon says it's time to make the migration:

“...as your RIs expire we encourage you to sign up for Savings Plans as they offer the same savings as RIs, but with additional flexibility.”

Savings 1.0: Reserved Instances

At their introduction, AWS Reserved Instances (often abbreviated as “RI” or “RIs”) were the only way to get significant discounts relative to on-demand prices by committing to a certain amount of usage. Instead of paying for compute as you need it on an “on-demand” basis, Reserved Instances let you configure a term length and commit to a constant, discounted hourly rate. Amazon wins because it secures 24x7 EC2 use it can forecast capacity on and customers win because they are locked in at a lower rate.

Unfortunately, managing Reserved Instances can get complicated very quickly. Given that Reserved Instances are always tied to a specific instance type, DevOps teams have 400+ different instance types with choices spread across storage size, platforms, architectures, regions and availability zones. Finding the best price for the optimal virtual machine configuration can be daunting.

Additionally, if organizationally you decide to switch to a different instance type *not* covered by your reserved instances you’d be paying more: (1) for the on-demand rate of the new instance type you chose and (2) for the committed use of the reserved instance you purchased whether or not you’re using it.

Your business needs can change dramatically over the span of 12 or 36 months (the two terms offered by Amazon), and Reserved Instances may not be flexible enough to keep pace with those changes. All of this segues into a much more flexible solution -- one that can grant you the same savings regardless of what instance types you choose to use: Savings Plans.

Savings 2.0: AWS Savings Plans

In late 2019, Amazon rolled out AWS Savings Plans, a more robust and flexible alternative to Reserved Instances. AWS Savings Plans can grant savings beyond EC2 Instances, too, as they cover services like AWS Fargate, AWS Lambda, and AWS SageMaker. Instead of having to evaluate which Reserved Instance(s) to buy and committing to a specific instance type, Savings Plans allow you to commit to a certain amount of spend in dollars and AWS will grant you the highest amount of savings possible regardless of the specific instance type you’re using.

If you want to learn more, we explain how AWS Savings Plans work at length in a separate article here.

Why are AWS Savings Plans a better choice than Reserved Instances? Flexibility

Once you start exploring AWS Savings Plans and compare them to Reserved Instances, you’ll notice they offer the same discounts alongside one massive benefit: the freedom of making infrastructure changes but still receive those same discounts.

When you select an AWS Savings Plan, you commit to a specific hourly rate that will hold throughout your term. As long as you know you’ll use that compute, you’ll pay a dependable cost for the duration of your commitment, exactly like Reserved Instances. AWS Savings Plans also grant the same discount rates as Reserved Instances. You’ll see hourly savings easily move towards 20, 30, 50, and even 70% based on the various term, payment and EC2 instance you choose.

But the key differentiator is flexibility. AWS Savings Plans differ from Reserved Instances when it comes to their flexibility: With RIs, you’re locked into an instance family and, typically, availability zone for the duration of your term. With AWS Savings Plans, you can change your instance family, size, region, and availability zone and still enjoy the Savings Plan discount. And, as your organization’s needs evolve over the one or three-year term you chose, you can change between EC2, AWS Lambda and AWS Fargate as needed, and the Savings Plan will default to granting the largest percentage discount possible.

Compared to Reserved Instances, AWS Savings Plans are almost always the right choice

EC2 Reserved Instances were a clear win for consumers at their introduction. However, AWS Savings Plans iterate on the benefits presented by Reserved Instances with added flexibility. That flexibility is incredibly useful as DevOps teams review deployments and make changes based on the ebbs and flow of everyday businesses - especially those that go through considerable growth.

If you’re looking to make a decision between buying Reserved Instances or Savings Plans, choosing AWS Savings Plans is almost always the right choice.