Savings Plans provide discounts of up to 72% on Amazon EC2, AWS Fargate and Lambda usage, compared to on-demand rates. You have to make a commitment to a specific amount of compute usage, measured in dollars per hour, for a 1 or 3 year term. Any usage beyond that commitment is charged at on-demand rates.
In this article we will review how Savings Plans fit in to a robust cloud optimization strategy to help you minimize costs and maximize performance.
Types of Savings Plans
What different types of Savings Plans does AWS offer?
EC2 Instance Savings Plans: Up to 72% savings on specific instance families within a region.
Compute Savings Plans: Up to 66% savings on EC2, Fargate usage regardless of region, instance family, OS, tenancy. The savings on AWS Lambda is up to 17%.
What are the differences between EC2 and Compute Savings Plans?
EC2 Instance Savings Plans apply only to EC2 instances within a specific region, while Compute Savings Plans apply across a wide range of compute options with Amazon EC2, AWS Fargate, and Lambda.
The table below summarizes the attribute flexibility for each plan.
What are the advantages and disadvantages of AWS Savings Plans?
Savings Plans are simpler and easier to manage than Reserved Instances. A deeper evaluation of your application environment will reveal that that they work best as part of a broader cost savings strategy.
Advantages of Savings Plans
- Savings Plans are the only discount option available for AWS Fargate and Lambda usage, which are not covered by RIs.
- Savings Plans reduce the cost of compute usage across any AWS region, without having to exchange or modify instances.
Limitations of Savings Plans
- Discounts are not as high for Windows and SQL Server, as they are for Linux. For blended use deployments that run on multiple OS and dbase platforms (e.g. both Linux and Windows), Savings Plans are not that compelling.
- While EC2 Instance Savings Plans apply to every OS, the discount is not higher than what is already available with a standard RI on any given OS.
- Large enterprise customers do not get the benefit of RI volume discounts under Savings Plans. Discounts between 5%-10% are available on total EC2 RI value of $500,000 to $10 million. Customers can negotiate even bigger discounts with AWS for larger volumes.
- Savings Plans only apply to compute services, and not available for Amazon RDS, Redshift and ElastiCache. RIs provide substantial savings for these services.
- Savings Plans cannot be sold in the AWS Marketplace. This prevents you from upgrading instances to new generation types for better performance and savings. Therefore, a 3 year commitment to Savings Plans is less attractive.
- You don’t have the incentive to defer the capital outlay for upfront payments, available when purchasing no upfront RIs. Savings Plans require at least 50% of the cost to be paid at the time of purchase.
Since the 1 or 3 year commitment for Savings Plans does not provide the ability to sell unused instances in the marketplace, you may get stuck with instances if Amazon Web Services changes pricing or introduces new types. Parquantix assumes the risk for unused RIs however. Our automated AI solution calculates the optimal mix of RIs and Savings Plans to give your business maximum flexibility, based on your application needs and long term growth objectives.