#reservedinstances

Are your cloud costs spiralling out of control?

AWS Reserved Instances can help reduce your AWS infrastructure costs.There are many important changes with respect to the new Reserved Instances, so we have put together the top insights to help you understand and better plan your RI purchases.

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Save your money with Reserved Instances now! If you are new to reserving instances on Amazon Web Services then you can refer to our step by step instruction here. While reserving EC2 instances you should consider the below mentioned important key-points.

24 Hours of Billing - All RI instances will attract 24 hours of billing irrespective of utilised hours, unlike previous generation Low or Medium utilisation instances.

RI Cost vs On-demand Cost - The billing data for RI vs On-demand is computed at each billing hour for each of the instances in each availability zone. This is important to understand as if you have any weekend shut down activity for Dev/QA machines.

Break Even Periods for M3 Families - The 1-YR RI requires 7.5 months and 3-YR requires 14.5 months for break even period. So unless utilisation is more than 80%, it doesn’t make sense to do RI for 1 year.

Partial vs All Upfront Payments - The difference between Partial and All Upfront is approximately 50% for initial payment. It doesn’t make sense unless you run a pre-approved budget for Cloud where money can be spent early-on.

Partial vs All Upfront Savings - The difference between savings rate for Partial Upfront vs All Upfront is around 1% for 1 year term and maximum of 2% for 3-year period. If you are cashflow conscious then Partial Upfront makes sense and All Upfront provides ease of budgeting.

Importance of Instance Families - Choose new generation instance families like M3, C4 and R3 for your workloads. It makes sense to choose few types of instance families, so you can roll up and roll down the machine types based on future usage.

Within Botmetric's cost analytics we have a separate section dedicated on helping you do Reserved Instance planning. We are releasing an upgraded version of the RI planner along with recommendations and improved utilisation information. You can check it out here after logging into your Botmetric application.

AWS has launched a simplified Reserved Instances plan by removing the earlier complexity, you would have received an email from them earlier this week.

Please find below a quick overview of the proposed changes:

1. No Upfront Fees - You can get upto 30% overall savings compared on-demand price by going with this plan. However, you would commit to pay for RI rate over 1 year period. This plan is available only for 1 year RI period.

2. Partial Upfront Fees - You can pay part of the fees upfront and get upto 60% savings over on-demand plan for 3 year RI term. This is our recommended plan as it best suits for most businesses and workloads on AWS.

3. Full Upfront Fees - You can pay full fees upfront and get upto 63% discount for 3 year RI term. The upfront fees are almost 2X for this plan compared to partial upfront plan. For certain workloads like databases, search servers on EC2 etc can be reserved under this option.

Botmetric recommends looking at option 2 as you can save 50% in terms of upfront fees and cost benefit is almost as good as option 3. Also we strongly recommend going with 3 year RI plan instead of choosing one year RI as it's best suited for most scenarios.