AWS EC2 Price Reductions

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AWS recently released a series of price reductions for EC2 reserved instances (RIs). The price reductions were primarily targeted at new instance types, with the obvious goal of encouraging customers to move from older instance types to new ones.

No-upfronts Reductions & Risks

For newer instance types (m4/c4/r4), the reductions were significant. The price difference between a no-upfront and a partial-upfront is now only 2-3 percent. This makes the no-upfront RIs much more attractive, but remember that no-upfronts carry a few risks that you need to consider.

  • No-upfronts are much more difficult to sell on the AWS Marketplace, especially for obscure types (e.g., d2). If you are not sure if you will need the RI for the whole term, you should consider the partial-upfront.
  • If AWS lowers their prices again in the future, you will not be able to sell the no-upfront RIs

In summary, the price changes make a stronger business case for the no-upfront, new instance types.  However, the potential risks for all no-upfront RIs continue to exist.

Three-Year Convertible RIs: Edge Cases

AWS also lowered the prices for three-year Convertible RIs. The average reductions (posted by AWS) for Convertible RIs for Linux in several representative regions follow:

 

US East (Northern Virginia)  US West (Oregon)  EU (Ireland) Asia Pacific (Tokyo) Asia Pacific (Singapore)
 C4

 -13%

 -13%

 -5%

 -5%

 -11%

 M4

 -19%

 -19%

 -17%

-15%

 -21%

 R4

 -15%

 -15%

 -15%

-15%

 -15%

 

Again, these reductions do improve the cost/benefit analysis for three-year Convertible RIs. However, we continue to feel that the convertible RIs are best for your edge cases: non-common sizes and/or non-Linux/UNIX.  A m4.4xlarge Windows would be a good candidate for a convertible RI while a m4.large Linux definitely would not.

Taken together, these price reductions can add significant value to your RI portfolio, assuming a balanced risk/reward RI strategy is in place.

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