EC2 Pricing Models

• 5 Different ways to pay for EC2:

  1. On-demand
  2. Spot
  3. Reserved
  4. Dedicated
  5. AWS Savings Plan
• On-demand is a pay-as-you-go (PAYG) model, where you consume compute and then you pay.
• When you launch an EC2 instance it is by default using On-Demand Pricing.
• On On-demand model you are charged by the second or the hour.
• Reserved Instance (RI) are designed for applications that have a steady-state, predictable usage, or require reserved capacity.
• RI is reduced in pricing based on the following:

  1. Term - the longer the term the greater the savings
  2. Class - the less flexible the greater the savings
  3. RI Attributes
  4. Payment Options - the greater upfront you give the greater the savings.
• RI Attributes (Instance Attributes) are limited based on Class Offerings and can affect the final price of RI instances.
• The 4 RI Attributes:

  1. Instance Type - this is composed of the instance family and the instance size.
  2. Region - in which region the reserved instance is purchased.
  3. Tenancy - whether your instance runs on shared or single-tenant hardware.
  4. Platform - what operating system was used (Linux or Windows).
• Regional RI means you purchased for a Region.
• Zonal RI means you purchase for an Availability zone.
• RI Limits is a limit to the number of Reserved Instances that you can purchase per month.
• Per month you can purchase:

  1. 20 Regional Reserved Instances per Region.
  2. 20 Zonal Reserved Instances per AZ.
• Regional Limits is where you cannot exceed your running On-demand instance limit by purchasing regional reserved instance.
• Zonal Limits is where you can exceed your running On-demand instance limit by purchasing zonal Reserved Instances.
• Capacity Reservations is when EC2 instances are backed by different kind of hardware, and so there is a finite amount of servers available within an Availability Zone per instance type or family.
• Capacity Reservation is a service of EC2 that allows you to request a reserve of EC2 instance type for a specific region and AZ.
• Standard RI is where the RI attributes can be modified.
• Convertible RI is where RI attributes cannot be modified instead you perform an exchange.
• RI Marketplace allows you to sell your unused Standard RI to recoup your RI Spend for RI you do not intend or cannot use.
• Spot Instances is when AWS has unused compute capacity that they want to maximize the utility of their idle server.
• Spot Instances provide a discount of 90% compared to on-demand pricing because instances can be terminated anytime when capacity is needed.
• Dedicated Instances is designed to meet regulatory requirements.
• Dedicated Host is used when you have string server-bound licensing that won't support multi-tenancy or cloud deployments.
• Multi-tenant is when multiple customers are running workloads on the same physical hardware and only separated via virtual isolation.
• Single Tenant is when a single customer has dedicated hardware and is physically separated from other hardwares.
• Savings Plan is an offer similar to Reserved Instances but simplifies the purchasing process.
• 3 Types of Savings Plan:

  1. Compute Savings Plan
  2. Ec2 Instance Savings Plan
  3. SageMaker Savings Plan
• Compute Savings Plan provide the most flexibility and help to reduce your costs by up to 66%
• EC2 Instance Savings Plan provide the lowest prices, offering savings of up to 72% in exchange for commitment of usage of individual instance families in a region.
• SageMaker helps you reduce costs by up to 64% and is applied for SageMaker usage.