Effectively Planning AWS Reserved Instances Optimizes Cloud Costs by 5X

 In Cost & Governance

AWS Reserved Instances are usually the most successful technique to cut down your AWS infrastructure costs. But sometimes it takes very long to decide the number of reservations needed. And by mistake if wrong amount or types of Reserved Instances are bought, your cost can come very high! This would  ultimately lead you to spending more money on your cloud than you save. Amazon EC2 Reserved Instances facilitate reserving Amazon EC2 computing capacity for 1 or 3 years. This is done to get a considerable discount of up to 75% in comparison with On-Demand instance pricing.

Reserved Instances also help in lowering your computing costs significantly. This is very important for your workload and enables you to have a capacity reservation. You can have assurance in your capability to initiate the number of instances you reserved when you require them most.

Why Should You Use Reserved Instances?

Reserved Instances are a very effective medium which serve a great purpose in your business requirements catering to your functional excellence. Time and again they have proved to be very useful for enterprises. Let’s see some of the facts to understand why you should use Reserved Instances.

Cost Effective

Reserved Instances offer you great savings by providing a huge discount of up to 75%. This is higher than the discount offered by On-Demand Instances.

Dependable

Reserved Instances are reliable to use. They give a capacity reservation which enables you to launch the number of reserved instances whenever required.

Flexible

With Reserved Instances, you can have the options to pay for complete, part, or nothing upfront. If you pay more up front, you can save more. In case your requirement changes, you can easily alter or put up for sale your Reserved Instance.

Types of Amazon EC2 Reserved Instances

Usually the Reserved Instance hourly rate is applied based on your uses of Amazon EC2 instance. And this is done when the characteristics of your instance usage go with the characteristics of your Reserved Instances.

Amazon EC2 Reserved Instance Choices

With Reserved Instances, you can decide the kind of capacity reservation to fit your functional needs.

  • Standard Reserved Instances: These instances are accessible any time. You can launch them 24 hours/day x 7 days/week. This choice offers you the flexibility to run the required number of instances you have reserved at any time you require them, including steady state workloads.
  • Scheduled Reserved Instances: These instances are accessible within the time windows you reserve. This option permits you to match your capacity reservation to a conventional recurring schedule that only needs a fraction of a day, a week, or a month. For example, if you have an expected workload such as a monthly financial risk study, you can schedule it to run on the first five days of the month. Another case would be scheduling nightly bill processing from 4pm-12am each weekday.

amazon-ec2-reserved-instance-choices

Amazon EC2 Reserved Instances and the Reserved Instance Marketplace is a powerful and cost-saving policy which you can adopt to run your business efficiently and save cost. However, before using Reserved Instances or the Reserved Instance Marketplace for your business, you need to make sure that the requirements for purchase and sale have been met. You also must recognize the facts and limitations on specific elements of Reserved Instances and the Reserved Instance Marketplace. This includes seller registration, banking, using the AWS free tier, dealing with cancelled instances, and others.

How to choose pricing of AWS Reserved Instances so that cost can be optimized?

As we mentioned earlier, reservations do not charge based on changing hourly usage. As an alternative, the instance is kept reserved for every hour of the length of the reservation for either one or three years. A low usage fee as compared to on-demand instances fees for each of those hours is charged. This is done as an understanding of upfront and monthly increments, based on the reservation type.

All Upfront: Reimburse for the complete reservation term in a single upfront compensation. This option proposes the highest savings for any business.

Partial Upfront: Reimburse for the part of the reservation term in an upfront compensation and then reimburse for the remainder in monthly installments. This option is a bit costlier as it is more than All Upfront, but less than No Upfront.

No Upfront: Reimburse for the reservation in monthly installments all through the term’s duration. This option is not great for saving but still better than on-demand instance pricing.

You can opt between these three choices depending on your organization’s cost of capital. Also the more you will pay upfront; the more you will be saving. But it doesn’t really matter which option you go ahead with as you will be obliged to pay for 1 or 3 full years of usage when you purchase a Reserved Instance. For most one-year reservations, the break-even point is between 50-80%. This means that if your instance is running for that much time or more, your decision to purchase an RI saved you more money than a traditional on-demand cost model would have.

Thus, planning your AWS Reserved Instances effectively is a crucial cost management strategy. Effectively planning your AWS Reserved Instances will help you optimize your cloud costs by 5x! Done right, it ensures that your business is fiscally prudent.

Botmetric’s AWS Reserved Instances Planner is a data driven intelligent approach towards resource reservation on AWS. It provides you with a list of all the recommended EC2 reservations. Botmetric analyzes your EC2 on-demand utilization and generates recommendation after matching it with your current set of reservations. The data is synced and refreshed multiple times a day. You can also view your AWS Reserved Instances utilization with respect to on-demand instance hours. Botmetric’s AWS RI Planner also gives you a detailed list of all your unused resources with smart modification options that helps you in saving more time in manual analysis as well as save more on your AWS cloud costs.

ec2-recommdations

Besides reservations, Botmetric’s Unused AWS Reserved Instance Analyzer provides you intuitive support to make all possible modifications to your  Unused RI with more room for savings per month.

unused-ri

If no possible modification is available for your AWS Reserved Instances then Botmetric’s RI Planner will simply suggest you to sell it via AWS.

To experience how Botmetric intelligently identifies RI modification opportunities based on your day to day utilization, we recommend you to try Botmetric’s Unused RI Analyzer.

You can start a free 14-day Botmetric trial here.

So, until we come back with more updates on Reserved Instances and AWS Cloud Cost Management Best Practices , keep in touch with us on Twitter.

Showing 3 comments
  • piyush khemka
    Reply

    This is regarding selling of my companies reserved instances. We had bought 3 RIs c48x from AWS for a project which is now not relevant to us. We have about 9 months left on it. Please let me know if you are interest to purchase the same.

    • Editor
      Reply

      Thank you for reaching out to us, Piyush. Currently, we are not in need of them. However, you can sign-up with Botmetric, which provides smart recommendations and enables you to make potential modifications to those unused RIs, thus helping you save money and make use of them better. Hope this info helps.

pingbacks / trackbacks

Leave a Comment