Amazon Elastic Compute Cloud (Amazon EC2) - How AWS Pricing Works

Amazon Elastic Compute Cloud (Amazon EC2)

Amazon Elastic Compute Cloud (Amazon EC2) is a web service that provides secure, resizable compute capacity in the cloud. It is designed to make web-scale cloud computing easier for developers. The simple web service interface of Amazon EC2 allows you to obtain and configure capacity with minimal friction with complete control of your computing resources.

Amazon EC2 reduces the time required to obtain and boot new server instances in minutes, allowing you to quickly scale capacity, both up and down, as your computing requirements change.

Pricing models for Amazon EC2

There are four ways to pay for Amazon EC2 instances: On-Demand Instances, Savings Plans, Reserved Instances, and Spot Instances.

On-Demand Instances

With On-Demand Instances, you pay for compute capacity per hour or per second, depending on which instances you run. No long-term commitments or upfront payments are required. You can increase or decrease your compute capacity to meet the demands of your application and only pay the specified hourly rates for the instance you use. On-Demand Instances are recommended for the following use cases:

  • Users who prefer the low cost and flexibility of Amazon EC2 without upfront payment or long-term commitments

  • Applications with short-term, spiky, or unpredictable workloads that cannot be interrupted

  • Applications being developed or tested on Amazon EC2 for the first time

Savings Plans

Savings Plans are a flexible pricing model that offer low prices on Amazon EC2, AWS Lambda, and AWS Fargate usage, in exchange for a commitment to a consistent amount of usage (measured in $/hour) for a 1 or 3 year term. Savings Plans is a flexible pricing model that provides savings of up to 72% on your AWS compute usage. This pricing model offers lower prices on Amazon EC2 instances usage, regardless of instance family, size, OS, tenancy or AWS Region, and also applies to AWS Fargate and AWS Lambda usage.

For workloads that have predictable and consistent usage, Savings Plans can provide significant savings compared to On-Demand Instances. it is recommended for:

  • Workloads with a consistent and steady-state usage

  • Customers who want to use different instance types and compute solutions across different locations

  • Customers who can make monetary commitment to use EC2 over a one-or three-year term

Spot Instances

Amazon EC2 Spot Instances allow you to request spare Amazon EC2 computing capacity for up to 90 percent off the On-Demand price. Spot Instances are recommended for:

  • Applications that have flexible start and end times

  • Applications that are only feasible at very low compute prices

  • Users with fault-tolerant and/or stateless workloads

Spot Instance prices are set by Amazon EC2 and adjust gradually based on long-term trends in supply and demand for Spot Instance capacity.

Reserved Instances

Amazon EC2 Reserved Instances provide you with a significant discount (up to 75 percent) compared to On-Demand Instance pricing. In addition, when Reserved Instances are assigned to a specific Availability Zone, they provide a capacity reservation, giving you additional confidence in your ability to launch instances when you need them.

Per-second billing

Per-second billing saves money and has a minimum of 60 seconds billing. It is particularly effective for resources that have periods of low and high usage such as development and testing, data processing, analytics, batch processing, and gaming applications. Learn more about per-second billing.

Estimating Amazon EC2 costs

When you begin to estimate the cost of using Amazon EC2, consider the following:

  • Clock hours of server time: Resources incur charges when they are running—for example, from the time Amazon EC2 instances are launched until they are terminated, or from the time Elastic IP addresses are allocated until the time they are de-allocated.

  • Instance type: Amazon EC2 provides a wide selection of instance types optimized to fit different use cases. Instance types comprise varying combinations of CPU, memory, storage, and networking capacity and give you the flexibility to choose the appropriate mix of resources for your applications. Each instance type includes at least one instance size, allowing you to scale your resources to the requirements of your target workload.

  • Pricing model: With On-Demand Instances, you pay for compute capacity by the hour with no required minimum commitments.

  • Number of instances: You can provision multiple instances of your Amazon EC2 and Amazon EBS resources to handle peak loads.

  • Load balancing: You can use Elastic Load Balancing to distribute traffic among Amazon EC2 Instances. The number of hours Elastic Load Balancing runs and the amount of data it processes contribute to the monthly cost.

  • Detailed monitoring: You can use Amazon CloudWatch to monitor your EC2 instances. By default, basic monitoring is enabled. For a fixed monthly rate, you can opt for detailed monitoring, which includes seven preselected metrics recorded once a minute. Partial months are charged on an hourly pro rata basis, at a per instance-hour rate.

  • Amazon EC2 Auto Scaling: Amazon EC2 Auto Scaling automatically adjusts the number of Amazon EC2 instances in your deployment according to the scaling policies you define. This service is available at no additional charge beyond Amazon CloudWatch fees.

  • Elastic IP addresses: You can have one Elastic IP address associated with a running instance at no charge.

  • Licensing: To run operating systems and applications on AWS, you can obtain variety of software licenses from AWS on a pay-as-you-go basis that are fully-compliant and do not require you to manage complex licensing terms and conditions. However, if you have existing licensing agreements with software vendors, you can bring your eligible licenses to the cloud to reduce total cost of ownership (TCO). AWS offers License Manager which makes it easier to manage your software licenses from vendors such as Microsoft, SAP, Oracle, and IBM across AWS and on-premises environments.

For more information, see Amazon EC2 pricing.