Amazon EC2 Reserved Instances and Other AWS Service Reservation Models
AWS Whitepaper

Reserved Instance Billing

All Reserved Instances provide you with a discount compared to On-Demand pricing. With Reserved Instances, you pay for the entire term regardless of actual use. You can choose to pay for your Reserved Instance up front, partially up front, or monthly, depending on the payment option specified for the Reserved Instance.

When Reserved Instances expire, you are charged On-Demand rates. You can set up a billing alert to warn you when your bill exceeds a threshold you define. For more information, see Monitoring Charges with Alerts and Notifications.