Which AWS Reserved Instance Should You Choose?

AWS Reserved Instance

Choosing your first AWS Reserved Instance can be confusing.

And I am going to walk you through some of the things I think you should consider before taking the plunge into a long term commitment.

A little over 6 months ago AWS changed the way that they sold reserved instances. They introduced new offerings to replace the old Light, Medium, and Heavy model. If you need to purchase a reserved instance today, there are three payment options:

  • All upfront – You pay for the entire Reserved Instance term (one or three years) with one upfront payment and get the best effective hourly price when compared to On-Demand.
  • Partial upfront – You pay for a portion of the Reserved Instance upfront and then pay for the remainder over the course of the one or three year term. This option balances the RI payments between upfront and hourly.
  • No upfront – You pay nothing upfront but commit to paying for the Reserved Instance over the course of the Reserved Instance term, with discounts (typically about 30%) when compared to On-Demand. This option is offered with a one year term.

Do you need an AWS Reserved Instance?

If you have a normal dedicated instance running on AWS that needs to be available 24/7 over the long term (like an e-commerce website), then the answer is probably yes. Otherwise, you are just wasting money. So assuming your project justifies it, we’ll use this as an example:

Let’s assume we have the following instance running on AWS.
AWS Reserved Instances

How do you convert an existing EC2 instance to an AWS Reserved Instance?

The truth is, you don’t. This was confusing to me when I purchased my first Reserved Instance. A Reserved Instance isn’t a different piece of hardware compared to your dedicated instance; it’s nothing more than an accounting term. It’s how you’re billed.

When you purchase a Reserved Instance, the AWS accounting algorithm will automatically apply the Reserved Instance rate to any single applicable EC2 instance. Criteria include:

  • Region and Availability Zone.
  • Instance type (micro, small, large, etc.).
  • The instance’s current state (i.e., it must be running).
  • The instance does not currently have an AWS Reserved Instance applied to it already.

So what you need to concentrate on is matching the region, availability zone, and instance type (micro, small, large, etc.) of your current Dedicated Instance to your soon-to-be-purchased Reserved Instance. So, let’s go ahead and purchase our Reserved Instance.

Purchasing a Reserved Instance

Note: Make sure you are in the same Region as your Dedicated Instance before starting this step.

  1. Go to your EC2 Dashboard and Select ‘Reserved Instances’ in the left-hand column.
  2. Then click on ‘Purchase Reserved Instances’ and you should be presented with the following screen:

Purchase AWS Reserved Instances - Steps
Confirm each of the following:

  1. Choose your Platform.
  2. Choose your Instance type.
  3. Choose your availability Zone.
  4. Choose your term.
  5. Leave Tenancy as Default.
  6. Leave offering as “Any”.

After that, you should be presented with a screen similar to the one below.
Purchase AWS Reserved Instances - Add to Cart
This is where your needs will be unique to your project, so you’ll have to choose this one for yourself.

When we work out how much per year each one of my possible alternatives would cost, we come up with the following:

No Upfront           $140/yr     
Partial Upfront   $131/yr  
All Upfront           $128.00/yr

I would probably go with the No Upfront as it doesn’t cost you any money initially and the overall difference is only $12. However as I said before, it is up to each individual to work out what best suits their needs. Just be sure that you really want this instance for the time period that you have chosen.

From there you just add it to your cart and make the purchase. Remember there is no going back, so if you purchase an AWS Reserved Instance for 12 months and decide you don’t want it you can’t get your money refunded from AWS. You can, however, sell your instance to someone else. But I am not in a position to offer any solid advice in this area.
It’s always best to carefully plan ahead.

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