Fixing Commitment Issues for RIs and Savings Plans on AWS

Have you ever tried to save money and end up wasting it? It sounds like something that shouldn’t be possible but on AWS it is possible, and even dangerously easy, to over-commit to discounts by buying too many Reserved Instances (RIs) or or too much of a Savings Plan. In these cases you are wasting money not by leaving servers on, but by paying for contracts that are not actually in use.

In some cases, this situation can be remedied. Through building Autopilot, we have developed strategies for allocating misallocated discounts productively. Here are the scenarios for fixing issues where you have the wrong type or too many RIs and Savings Plans:

To discuss these strategies more in depth, chat with us in Slack.

Sell Reserved Instances

Reserved Instances can be sold as long as they are for EC2. It is possible to buy RIs for RDS, ElastiCache, Redshift, and OpenSearch but they cannot be sold, as there is no marketplace for those services. Instead, use one of the strategies below to convert or exchange them. With EC2, the Reserved Instance can be listed on the AWS RI Marketplace.

The most important factor for selling a reservation on the marketplace is “instance liquidity”, or how quickly and easily you can sell an RI. Certain Reserved Instances are highly liquid while others with size flexibility limitations such as those purchased for a specific availability zone, are less liquid. It’s very commonly known that certain instances, such as GPUs (e.g. a p3.8xlarge RI), have far lower liquidity levels relative to more “traditional” compute instances such as M, C and R instances.

Sporadic GPU usage patterns, trialing different sizes and lack of size flexibility for the instance families it makes it difficult to sell GPU RIs. In particular the following instance types are GPUs and do not have size flexibility so their liquidity is severely limited. In other words, carefully consider before buy these RIs because they may be harder to sell: G4ad, G4dn, G5, and G5g.

Sell Reserved Instances without a US Bank Account

A United States bank account is required to sell instances on the AWS RI Marketplace. In effect, the cash payout from the sale needs to be deposited somewhere and AWS only supports deposits to accounts that are established with US banks.

However, you can do some additional legwork to setup an account with Hyperwallet, a PayPal service. Note that there will be an additional PayPal fee to process these payouts.

Convert Reserved Instance Type

RI types can sometimes be converted to another type. In particular, Convertible Reserved Instances can be converted. So you may start with a m5.4xlarge and convert it to an r5.4xlarge. However this option offers a lower discount than the standard reserved instance type. Convertible RIs are only available on EC2.

Other services which combine the instance type and software running on it - like ElastiCache - do not allow converting RIs. However there may be an opportunity to do so if your usage on AWS is increasing. Contact your account manager to discuss options on other services.

Convert Reserved Instances to Savings Plans

RIs can sometimes be moved into Savings Plans. AWS prefers customers to use Savings Plans and AWS support representatives can be amenable to this. This impacts AWS in the short term but makes it a win-win for a commitment to AWS that is flexible for a longer period of time. It is not a guarantee but here is one scenario where you could approach your AWS account manager with this option:

You have 8 months left on a series of RIs which are not useful for your account. Instead of paying out the remaining 8 months of the RI, you could go to AWS and say “what if we bought a 3 year Savings Plan and used our unused RIs to pay for some of it?”. In this way, you are making a larger commitment to AWS so they are happy, but you win as well because you convert your unused discounts into productively applied SPs.

Sell Savings Plans

After making a commitment to a Savings Plan, you’re locked in. There is no market for reselling Saving Plans. Because of this, some customers test the water with a 1 year commitment (35% off) instead of a 3 year commitment which offers the greatest discount (66% off). If your infrastructure changes to the downside so that you’re not fully utilizing Savings Plans, this can result in a situation where you’re overpaying AWS for the infrastructure that you’re using.

While Saving Plans are operationally a bit easier to buy, with 3 year, no-upfront reserved instance the discount rate is 55% and then these can be sold as soon as 30 days after buying them. So if you find yourself concerned about potentially needing to scale down at one point, a Reserved Instance could be a better option.

Savings Plans with Reserved Instances

In certain cases, a category that has Savings Plan coverage already can be augmented with Reserved Instances, which may seem counterintuitive. If you buy a baseline of RIs for this category, the savings plan coverage would bump up to all spikes and other categories to the point where you are more optimally covered. This is an advanced strategy and requires you to manage both RIs and Savings Plans, but it will get you the highest coverage number possible.

Solving Commitment Issues

With this playbook, the formerly impossible means of getting out of incorrect committed-use discounts on Amazon become possible. But do note that in many cases these approaches do not have a 100% chance of working. It is better to purchase discounts correctly. Vantage can help manage the complexity of discounts on cloud service providers, or at the very least chat about options in Slack.