How Reserved Instances are applied

Reserved Instances are not physical instances, but rather a billing discount that is applied to the running On-Demand Instances in your account. The On-Demand Instances must match certain specifications of the Reserved Instances in order to benefit from the billing discount.

If you purchase a Reserved Instance and you already have a running On-Demand Instance that matches the specifications of the Reserved Instance, the billing discount is applied immediately and automatically. You do not have to restart your instances. If you do not have an eligible running On-Demand Instance, launch an On-Demand Instance with the same specifications as your Reserved Instance. For more information, see Use your Reserved Instances.

The offering class (Standard or Convertible) of the Reserved Instance does not affect how the billing discount is applied.

How zonal Reserved Instances are applied

A Reserved Instance that is purchased to reserve capacity in a specific Availability Zone is called a zonal Reserved Instance.

• The Reserved Instance discount applies to matching instance usage in that Availability Zone.

• The attributes (tenancy, platform, Availability Zone, instance type, and instance size) of the running instances must match that of the Reserved Instances.

For example, if you purchase two c4.xlarge default tenancy Linux/Unix Standard Reserved Instances for Availability Zone us-east-1a, then up to two c4.xlarge default tenancy Linux/Unix instances running in the Availability Zone us-east-1a can benefit from the Reserved Instance discount.

How regional Reserved Instances are applied

A Reserved Instance that is purchased for a Region is called a regional Reserved Instance, and provides Availability Zone and instance size flexibility.

• The Reserved Instance discount applies to instance usage in any Availability Zone in that Region.

• The Reserved Instance discount applies to instance usage within the instance family, regardless of size—this is known as instance size flexibility.

Instance size flexibility

With instance size flexibility, the Reserved Instance discount applies to instance usage within the instance family. The Reserved Instance is applied from the smallest to the largest instance size within the instance family based on the normalization factor. For an example of how the Reserved Instance discount is applied, see Scenario 2: Reserved Instances in a single account using the normalization factor.

Limitations

Instance size flexibility applies only to Regional Reserved Instances.

Instance size flexibility does not apply to the following Reserved Instances:

• Reserved Instances that are purchased for a specific Availability Zone (zonal Reserved Instances)

• Reserved Instances with dedicated tenancy

• Reserved Instances for Windows Server, Windows Server with SQL Standard, Windows Server with SQL Server Enterprise, Windows Server with SQL Server Web, RHEL, and SUSE Linux Enterprise Server

• Reserved Instances for G4ad, G4dn, G5, and G5g instances

Instance size flexibility determined by normalization factor

Instance size flexibility is determined by the normalization factor of the instance size. The discount applies either fully or partially to running instances of the same instance family, depending on the instance size of the reservation, in any Availability Zone in the Region. The only attributes that must be matched are the instance family, tenancy, and platform.

The following table lists the different sizes within an instance family, and the corresponding normalization factor. This scale is used to apply the discounted rate of Reserved Instances to the normalized usage of the instance family.

Instance size	Normalization factor
nano	0.25
micro	0.5
small	1
medium	2
large	4
xlarge	8
2xlarge	16
3xlarge	24
4xlarge	32
6xlarge	48
8xlarge	64
9xlarge	72
10xlarge	80
12xlarge	96
16xlarge	128
18xlarge	144
24xlarge	192
32xlarge	256
56xlarge	448
112xlarge	896

For example, a t2.medium instance has a normalization factor of 2. If you purchase a t2.medium default tenancy Amazon Linux/Unix Reserved Instance in the US East (N. Virginia) and you have two running t2.small instances in your account in that Region, the billing benefit is applied in full to both instances.

Or, if you have one t2.large instance running in your account in the US East (N. Virginia) Region, the billing benefit is applied to 50% of the usage of the instance.

The normalization factor is also applied when modifying Reserved Instances. For more information, see Modify Reserved Instances.

Normalization factor for bare metal instances

Instance size flexibility also applies to bare metal instances within the instance family. If you have regional Amazon Linux/Unix Reserved Instances with shared tenancy on bare metal instances, you can benefit from the Reserved Instance savings within the same instance family. The opposite is also true: if you have regional Amazon Linux/Unix Reserved Instances with shared tenancy on instances in the same family as a bare metal instance, you can benefit from the Reserved Instance savings on the bare metal instance.

The metal instance size does not have a single normalization factor. A bare metal instance has the same normalization factor as the equivalent virtualized instance size within the same instance family. For example, an i3.metal instance has the same normalization factor as an i3.16xlarge instance.

Instance size	Normalization factor
a1.metal	32
m5zn.metal | z1d.metal	96
c6g.metal | c6gd.metal | i3.metal | m6g.metal | m6gd.metal | r6g.metal | r6gd.metal | x2gd.metal	128
c5n.metal	144
c5.metal | c5d.metal | i3en.metal | m5.metal | m5d.metal | m5dn.metal | m5n.metal | r5.metal | r5b.metal | r5d.metal | r5dn.metal | r5n.metal	192
u-*.metal	896

For example, an i3.metal instance has a normalization factor of 128. If you purchase an i3.metal default tenancy Amazon Linux/Unix Reserved Instance in the US East (N. Virginia), the billing benefit can apply as follows:

• If you have one running i3.16xlarge in your account in that Region, the billing benefit is applied in full to the i3.16xlarge instance (i3.16xlarge normalization factor = 128).

• Or, if you have two running i3.8xlarge instances in your account in that Region, the billing benefit is applied in full to both i3.8xlarge instances (i3.8xlarge normalization factor = 64).

• Or, if you have four running i3.4xlarge instances in your account in that Region, the billing benefit is applied in full to all four i3.4xlarge instances (i3.4xlarge normalization factor = 32).

The opposite is also true. For example, if you purchase two i3.8xlarge default tenancy Amazon Linux/Unix Reserved Instances in the US East (N. Virginia), and you have one running i3.metal instance in that Region, the billing benefit is applied in full to the i3.metal instance.

Examples of applying Reserved Instances

The following scenarios cover the ways in which Reserved Instances are applied.

• Scenario 1: Reserved Instances in a single account
• Scenario 2: Reserved Instances in a single account using the normalization factor
• Scenario 3: Regional Reserved Instances in linked accounts
• Scenario 4: Zonal Reserved Instances in a linked account

Scenario 1: Reserved Instances in a single account

You are running the following On-Demand Instances in account A:

• 4 x m3.large Linux, default tenancy instances in Availability Zone us-east-1a

• 2 x m4.xlarge Amazon Linux, default tenancy instances in Availability Zone us-east-1b

• 1 x c4.xlarge Amazon Linux, default tenancy instances in Availability Zone us-east-1c

You purchase the following Reserved Instances in account A:

• 4 x m3.large Linux, default tenancy Reserved Instances in Availability Zone us-east-1a (capacity is reserved)

• 4 x m4.large Amazon Linux, default tenancy Reserved Instances in Region us-east-1

• 1 x c4.large Amazon Linux, default tenancy Reserved Instances in Region us-east-1

The Reserved Instance benefits are applied in the following way:

• The discount and capacity reservation of the four m3.large zonal Reserved Instances is used by the four m3.large instances because the attributes (instance size, Region, platform, tenancy) between them match.

• The m4.large regional Reserved Instances provide Availability Zone and instance size flexibility, because they are regional Amazon Linux Reserved Instances with default tenancy.

  An m4.large is equivalent to 4 normalized units/hour.

  You've purchased four m4.large regional Reserved Instances, and in total, they are equal to 16 normalized units/hour (4x4). Account A has two m4.xlarge instances running, which is equivalent to 16 normalized units/hour (2x8). In this case, the four m4.large regional Reserved Instances provide the billing benefit to an entire hour of usage of the two m4.xlarge instances.

• The c4.large regional Reserved Instance in us-east-1 provides Availability Zone and instance size flexibility, because it is a regional Amazon Linux Reserved Instance with default tenancy, and applies to the c4.xlarge instance. A c4.large instance is equivalent to 4 normalized units/hour and a c4.xlarge is equivalent to 8 normalized units/hour.

  In this case, the c4.large regional Reserved Instance provides partial benefit to c4.xlarge usage. This is because the c4.large Reserved Instance is equivalent to 4 normalized units/hour of usage, but the c4.xlarge instance requires 8 normalized units/hour. Therefore, the c4.large Reserved Instance billing discount applies to 50% of c4.xlarge usage. The remaining c4.xlarge usage is charged at the On-Demand rate.

Scenario 2: Reserved Instances in a single account using the normalization factor

You are running the following On-Demand Instances in account A:

• 2 x m3.xlarge Amazon Linux, default tenancy instances in Availability Zone us-east-1a

• 2 x m3.large Amazon Linux, default tenancy instances in Availability Zone us-east-1b

You purchase the following Reserved Instance in account A:

• 1 x m3.2xlarge Amazon Linux, default tenancy Reserved Instance in Region us-east-1

The Reserved Instance benefits are applied in the following way:

• The m3.2xlarge regional Reserved Instance in us-east-1 provides Availability Zone and instance size flexibility, because it is a regional Amazon Linux Reserved Instance with default tenancy. It applies first to the m3.large instances and then to the m3.xlarge instances, because it applies from the smallest to the largest instance size within the instance family based on the normalization factor.

  An m3.large instance is equivalent to 4 normalized units/hour.

  An m3.xlarge instance is equivalent to 8 normalized units/hour.

  An m3.2xlarge instance is equivalent to 16 normalized units/hour.

  The benefit is applied as follows:

  The m3.2xlarge regional Reserved Instance provides full benefit to 2 x m3.large usage, because together these instances account for 8 normalized units/hour. This leaves 8 normalized units/hour to apply to the m3.xlarge instances.

  With the remaining 8 normalized units/hour, the m3.2xlarge regional Reserved Instance provides full benefit to 1 x m3.xlarge usage, because each m3.xlarge instance is equivalent to 8 normalized units/hour. The remaining m3.xlarge usage is charged at the On-Demand rate.

Scenario 3: Regional Reserved Instances in linked accounts

Reserved Instances are first applied to usage within the purchasing account, followed by qualifying usage in any other account in the organization. For more information, see Reserved Instances and consolidated billing. For regional Reserved Instances that offer instance size flexibility, the benefit is applied from the smallest to the largest instance size within the instance family.

You're running the following On-Demand Instances in account A (the purchasing account):

• 2 x m4.xlarge Linux, default tenancy instances in Availability Zone us-east-1a

• 1 x m4.2xlarge Linux, default tenancy instances in Availability Zone us-east-1b

• 2 x c4.xlarge Linux, default tenancy instances in Availability Zone us-east-1a

• 1 x c4.2xlarge Linux, default tenancy instances in Availability Zone us-east-1b

Another customer is running the following On-Demand Instances in account B—a linked account:

• 2 x m4.xlarge Linux, default tenancy instances in Availability Zone us-east-1a

You purchase the following regional Reserved Instances in account A:

• 4 x m4.xlarge Linux, default tenancy Reserved Instances in Region us-east-1

• 2 x c4.xlarge Linux, default tenancy Reserved Instances in Region us-east-1

The regional Reserved Instance benefits are applied in the following way:

• The discount of the four m4.xlarge Reserved Instances is used by the two m4.xlarge instances and the single m4.2xlarge instance in account A (purchasing account). All three instances match the attributes (instance family, Region, platform, tenancy). The discount is applied to instances in the purchasing account (account A) first, even though account B (linked account) has two m4.xlarge that also match the Reserved Instances. There is no capacity reservation because the Reserved Instances are regional Reserved Instances.

• The discount of the two c4.xlarge Reserved Instances applies to the two c4.xlarge instances, because they are a smaller instance size than the c4.2xlarge instance. There is no capacity reservation because the Reserved Instances are regional Reserved Instances.

Scenario 4: Zonal Reserved Instances in a linked account

In general, Reserved Instances that are owned by an account are applied first to usage in that account. However, if there are qualifying, unused Reserved Instances for a specific Availability Zone (zonal Reserved Instances) in other accounts in the organization, they are applied to the account before regional Reserved Instances owned by the account. This is done to ensure maximum Reserved Instance utilization and a lower bill. For billing purposes, all the accounts in the organization are treated as one account. The following example might help explain this.

You're running the following On-Demand Instance in account A (the purchasing account):

• 1 x m4.xlarge Linux, default tenancy instance in Availability Zone us-east-1a

A customer is running the following On-Demand Instance in linked account B:

• 1 x m4.xlarge Linux, default tenancy instance in Availability Zone us-east-1b

You purchase the following regional Reserved Instances in account A:

• 1 x m4.xlarge Linux, default tenancy Reserved Instance in Region us-east-1

A customer also purchases the following zonal Reserved Instances in linked account C:

• 1 x m4.xlarge Linux, default tenancy Reserved Instances in Availability Zone us-east-1a

The Reserved Instance benefits are applied in the following way:

• The discount of the m4.xlarge zonal Reserved Instance owned by account C is applied to the m4.xlarge usage in account A.

• The discount of the m4.xlarge regional Reserved Instance owned by account A is applied to the m4.xlarge usage in account B.

• If the regional Reserved Instance owned by account A was first applied to the usage in account A, the zonal Reserved Instance owned by account C remains unused and usage in account B is charged at On-Demand rates.

For more information, see Reserved Instances in the Billing and Cost Management Report.