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Billing and Provisioning Options

AWS offers several billing and provisioning options for Amazon EC2 instances, each designed to suit different use cases, workloads, and budgetary requirements.

1. On-Demand Instances

Characteristics:
No Commitment: Pay for compute capacity by the hour or second with no long-term commitments.
Flexibility: Ideal for applications with unpredictable workloads that cannot be interrupted.
Use Cases: Development, testing, and short-term projects.
Advantages:
No upfront cost.
Simple to use and provision.
Ideal for auto-scaling environments where workloads fluctuate.

2. Spot Instances

Characteristics:
Cost-Effective: Utilize unused EC2 capacity at up to a 90% discount compared to On-Demand prices.
Flexible: Suitable for fault-tolerant, flexible, and stateless applications.
Interruption Notice: Receive a two-minute warning before instances are terminated when EC2 reclaims capacity.
Use Cases:
Big data analysis.
CI/CD pipelines.
Web servers.
High-performance computing (HPC).
Management:
Launch using the Spot management console, CLI, API, or the same interface as On-Demand instances.
Use the RequestSpotFleet API for large-scale deployment and diversification across multiple capacity pools.
Configure instances to stop or hibernate upon interruption to mitigate disruption.

3. Reserved Instances (RIs)

Characteristics:
Cost Savings: Significant discounts in exchange for a commitment of 1 or 3 years.
Capacity Reservation: Reserved capacity in a specific Availability Zone if needed.
Three Types: Standard RIs, Convertible RIs, and Scheduled RIs.
Use Cases:
Steady-state workloads with predictable usage patterns.
Applications requiring reserved capacity.
Attributes:
Instance type, platform, tenancy, and optionally, Availability Zone.
Standard RIs offer the highest discount but are less flexible.
Convertible RIs allow for changes in instance types within the same family.
Scheduled RIs are reserved for specific recurring periods.
Advantages:
Reduces hourly rates with upfront payments.
Can be used in Auto Scaling Groups and Placement Groups.
Shared across multiple accounts within Consolidated Billing.
Reserved Instances
Column 1
Standard
Convertible
1
Terms
1 year, 3 year
1 year, 3 year
2
Average discount off On-Demand price
40% – 60%
31% – 54%
3
Change AZ, instance size, networking type
Yes via ModifyReservedInstance API or console
Yes via ExchangeReservedInstance API or console
4
Change instance family, OS, tenancy, payment options
No
Yes
5
Benefit from price reductions
No
Yes
There are no rows in this table
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4. Dedicated Hosts

Characteristics:
Physical Isolation: Physical servers dedicated for your use.
Control: Full control over the instances deployed on the host.
Compliance: Suitable for regulatory and licensing requirements.
Use Cases:
Server-bound software licenses.
Applications requiring predictable performance and complete isolation.
Regulatory compliance needs.
Billing: Billed per host, available as On-Demand or with a Dedicated Host Reservation.

5. Dedicated Instances

Characteristics:
Physical Isolation: Virtualised instances on hardware dedicated to you.
Visibility: Less control over instance placement compared to Dedicated Hosts.
Use Cases:
Applications requiring isolation but not the detailed control of Dedicated Hosts.
Billing: Billed per instance, available as On-Demand, Reserved Instances, and Spot Instances. Additional cost of $2 per hour per region.
Differences between dedicates instances and dedicated hosts
Characteristic
Dedicated Instances
Dedicated Hosts
1
Enables the use of dedicated physical servers
X
X
2
Per instance billing (subject to a $2 per region fee)
X
3
Per host billing
X
4
Visibility of sockets, cores, host ID
X
5
Affinity between a host and instance
X
6
Targeted instance placement
X
7
Automatic instance placement
X
X
8
Add capacity using an allocation request
X
There are no rows in this table
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Partial instance-hours consumed are billed based on instance usage.
Instances are billed when they’re in a running state – need to stop or terminate to avoid paying.
Charging by the hour or second (by the second with Linux instances only).
Data between instances in different regions is charged (in and out).
Regional Data Transfer rates apply if at least one of the following is true, but are only charged once for a given instance even if both are true:
The other instance is in a different Availability Zone, regardless of which type of address is used.
Public or Elastic IP addresses are used, regardless of which Availability Zone the other instance is in.

Summary

Choosing the right EC2 billing and provisioning option depends on the specific requirements of your workloads, budget constraints, and operational needs.
On-Demand Instances are ideal for short-term, unpredictable workloads.
Spot Instances offer significant cost savings for flexible, fault-tolerant applications.
Reserved Instances provide cost efficiency for predictable, steady-state usage.
Dedicated Hosts offer physical isolation and control for compliance and licensing needs.
Dedicated Instances ensure isolation without the additional control provided by Dedicated Hosts.
Each option provides different levels of flexibility, cost savings, and control, enabling you to tailor your EC2 usage to your specific business and technical requirements.
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Comparing Amazon EC2 Pricing Models
Column 1
Column 2
Column 3
1
On-Demand
Reserved
Spot
2
No upfront fee
Options: No upfront, partial upfront or all upfront
No upfront fee
3
Charged by hour or second
Charged by hour or second
Charged by hour or second
4
No commitment
1-year or 3-year commitment
No commitment
5
Ideal for short term needs or unpredictable workloads
Ideal for steady-state workloads and predictable usage
Ideal for cost-sensitive, compute intensive use cases that can withstand interruption
There are no rows in this table
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Amazon EC2 provides the following purchasing options to enable you to optimize your costs based on your needs:
⁠
On-Demand Instances
⁠
– Pay, by the second, for the instances that you launch.
⁠
Savings Plans
⁠
– Reduce your Amazon EC2 costs by making a commitment to a consistent amount of usage, in USD per hour, for a term of 1 or 3 years.
⁠
Reserved Instances
⁠
– Reduce your Amazon EC2 costs by making a commitment to a consistent instance configuration, including instance type and Region, for a term of 1 or 3 years.
⁠
Spot Instances
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– Request unused EC2 instances, which can reduce your Amazon EC2 costs significantly.
⁠
Dedicated Hosts
⁠
– Pay for a physical host that is fully dedicated to running your instances, and bring your existing per-socket, per-core, or per-VM software licenses to reduce costs.
⁠
Dedicated Instances
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– Pay, by the hour, for instances that run on single-tenant hardware.
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Capacity Reservations
⁠
– Reserve capacity for your EC2 instances in a specific Availability Zone.
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