How to Further Save Costs

In the example deployment we have been discussing, we used On-Demand Instances for all six of our instances. With On-Demand Instances, you are charged only from the time you launch an instance until the time you terminate it. If you plan to be running your instances for a long time, you can save more money by reserving them.

To obtain Reserved Instances, you make a low, one-time payment for each instance you want to reserve. In return, you receive a significant discount on the hourly usage charge. If you know approximately how heavily your Amazon EC2 instances will be used when they are running, you can save even more by opting for Heavy, Medium, or Light Utilization Reserved Instances. With Heavy Utilization, you pay a higher upfront fee, but your hourly usage rate is the lower than that for Medium and Light Utilizaton Reserved Instances. Light Utilization has the lowest upfront free, but your hourly rate is higher than that for Medium and Heavy Utilization Instances. In the previous example, three of the instances are running all the time. This is an ideal candidate for Heavy Utilization Reserved Instances. Two instances run only during peak traffic, about one third of the time. These instances are ideal candidates for Light Utilization Reserved Instances. Because the instance that performs the nightly backups runs only a few hours a day, you can run it as an On-Demand Instance.

Reserved Instances can be obtained on 1-year or 3-year terms. The 3-year term can offer additional savings over the 1-year term. For more information about reserved instances, go to Amazon EC2 Reserved Instances. You can see the cost comparison with On-Demand versus Reserved Instances over a three-year period in the following table.

Using the same characteristics and metrics in the above example, let's update the calculator to enter the Heavy and Light Utilization as in the following diagram.

The total monthly cost is calcuated the same way as the previous example, except that there is an additional one-time fee for Reserved Instances. The total cost is shown in the following diagram.

The following table compares the total costs for using a mix of Heavy and Light Utilization Reserved Instances with those for On-Demand Instances.

As you can see from the table, by using a mix of Heavy and Light Utilization Reserved Instances in this example, you can save approximately 32%. For more information on how AWS pricing works, go to the How AWS Pricing Works whitepaper.

Another way you can save money is by using Spot Instances. Spot Instances are unused Amazon EC2 capacity that you bid for. Instances are charged at the Spot Price, which is set by Amazon EC2 and fluctuates periodically depending on the supply of, and demand for, Spot Instance capacity. If your maximum bid exceeds the current Spot Price, your bid request is fulfilled, and your instances will run until either you choose to terminate them or the Spot Price increases above your maximum bid, whichever is sooner. To learn more about Spot Instances, go to http://aws.amazon.com/ec2/spot-instances.