Which AWS Reserved Instance Should You Choose?

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.

Avatar

Written by

Michael Sheehy

I have been UNIX/Linux System Administrator for the past 15 years and am slowly moving those skills into the AWS Cloud arena. I am passionate about AWS and Cloud Technologies and the exciting future that it promises to bring.

Related Posts

Avatar
Andrew Larkin
— August 13, 2019

Content Roadmap: AZ-500, ITIL 4, MS-100, Google Cloud Associate Engineer, and More

Last month, Cloud Academy joined forces with QA, the UK’s largest B2B skills provider, and it put us in an excellent position to solve a massive skills gap problem. As a result of this collaboration, you will see our training library grow with additions from QA’s massive catalog of 500+...

Read more
  • AWS
  • Azure
  • content roadmap
  • Google Cloud Platform
Avatar
Adam Hawkins
— August 9, 2019

DevSecOps: How to Secure DevOps Environments

Security has been a friction point when discussing DevOps. This stems from the assumption that DevOps teams move too fast to handle security concerns. This makes sense if Information Security (InfoSec) is separate from the DevOps value stream, or if development velocity exceeds the band...

Read more
  • AWS
  • cloud security
  • DevOps
  • DevSecOps
  • Security
Avatar
Stefano Giacone
— August 8, 2019

Test Your Cloud Knowledge on AWS, Azure, or Google Cloud Platform

Cloud skills are in demand | In today's digital era, employers are constantly seeking skilled professionals with working knowledge of AWS, Azure, and Google Cloud Platform. According to the 2019 Trends in Cloud Transformation report by 451 Research: Business and IT transformations re...

Read more
  • AWS
  • Cloud skills
  • Google Cloud
  • Microsoft Azure
Avatar
Andrew Larkin
— August 7, 2019

Disadvantages of Cloud Computing

If you want to deliver digital services of any kind, you’ll need to estimate all types of resources, not the least of which are CPU, memory, storage, and network connectivity. Which resources you choose for your delivery —  cloud-based or local — is up to you. But you’ll definitely want...

Read more
  • AWS
  • Azure
  • Cloud Computing
  • Google Cloud Platform
Joe Nemer
Joe Nemer
— August 6, 2019

Google Cloud vs AWS: A Comparison (or can they be compared?)

The "Google Cloud vs AWS" argument used to be a common discussion among our members, but is this still really a thing? You may already know that there are three major players in the public cloud platforms arena: Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP)...

Read more
  • AWS
  • Google Cloud Platform
  • Kubernetes
Avatar
Stuart Scott
— July 29, 2019

Deployment Orchestration with AWS Elastic Beanstalk

If you're responsible for the development and deployment of web applications within your AWS environment for your organization, then it's likely you've heard of AWS Elastic Beanstalk. If you are new to this service, or simply need to know a bit more about the service and the benefits th...

Read more
  • AWS
  • elastic beanstalk
Avatar
Stuart Scott
— July 26, 2019

How to Use & Install the AWS CLI

What is the AWS CLI? | The AWS Command Line Interface (CLI) is for managing your AWS services from a terminal session on your own client, allowing you to control and configure multiple AWS services and implement a level of automation. If you’ve been using AWS for some time and feel...

Read more
  • AWS
  • AWS CLI
  • Command line interface
Alisha Reyes
Alisha Reyes
— July 22, 2019

Cloud Academy’s Blog Digest: July 2019

July has been a very exciting month for us at Cloud Academy. On July 10, we officially joined forces with QA, the UK’s largest B2B skills provider (read the announcement). Over the coming weeks, you will see additions from QA’s massive catalog of 500+ certification courses and 1500+ ins...

Read more
  • AWS
  • Azure
  • Cloud Academy
  • Cybersecurity
  • DevOps
  • Kubernetes
Avatar
Stuart Scott
— July 18, 2019

AWS Fundamentals: Understanding Compute, Storage, Database, Networking & Security

If you are just starting out on your journey toward mastering AWS cloud computing, then your first stop should be to understand the AWS fundamentals. This will enable you to get a solid foundation to then expand your knowledge across the entire AWS service catalog.   It can be both d...

Read more
  • AWS
  • Compute
  • Database
  • fundamentals
  • networking
  • Security
  • Storage
Avatar
Adam Hawkins
— July 17, 2019

How to Become a DevOps Engineer

The DevOps Handbook introduces DevOps as a framework for improving the process for converting a business hypothesis into a technology-enabled service that delivers value to the customer. This process is called the value stream. Accelerate finds that applying DevOps principles of flow, f...

Read more
  • AWS
  • AWS Certifications
  • DevOps
  • DevOps Foundation Certification
  • Engineer
  • Kubernetes
Avatar
Vineet Badola
— July 15, 2019

AWS AMI Virtualization Types: HVM vs PV (Paravirtual VS Hardware VM)

Amazon Machine Images (AWS AMI) offers two types of virtualization: Paravirtual (PV) and Hardware Virtual Machine (HVM). Each solution offers its own advantages. When we’re using AWS, it’s easy for someone — almost without thinking —  to choose which AMI flavor seems best when spinning...

Read more
  • AWS
  • Hardware Virtual Machine
  • Paravirtual
  • Virtualization
Avatar
Stuart Scott
— July 2, 2019

AWS Machine Learning Services

The speed at which machine learning (ML) is evolving within the cloud industry is exponentially growing, and public cloud providers such as AWS are releasing more and more services and feature updates to run in parallel with the trend and demand of this technology within organizations t...

Read more
  • Amazon Machine Learning
  • AWS
  • AWS re:Invent
  • Machine Learning