Which Reservation is Right for You?

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Identifying the right type of reservation for your needs may seem as frustrating as buying a plane ticket. While I’m sure we all appreciate options, the multitude of choices can become overwhelming – from prices that fluctuate on a daily basis to varying mileage points, awards programs and even seat prices. A person could go insane, especially if you don’t even know what the advantage of the “benefits” are – which might be the case with AWS reservations. When it comes to these, you’re simply trying to identify which is best for you, right? To do so, let’s first start by peeling back the layers of the reservation and look at the core.

Reservation Components

A reservation is a contract that allows you to purchase EC2 usage from AWS at a discount. Every reservation has the following six components:

  1. Term: One or three years
  2. OS: Linux, Windows, etc.
  3. Instance & Size: M3.large, C4.extralarge, etc.
  4. Tenancy: Dedicated & default
  5. Upfront Cost: Amount you need to pay Amazon at inception of reservation
  6. Hourly Cost: Ongoing charge for reservation whether you have a running instance or not

Now, you’ll be able to select 1-4 based upon your clients’ needs. What I’m assuming you’re most interested in is the bottom line. In other words, how much will these options cost you? Review the chart below for a quick cost breakdown.

Upfront Cost Hourly Cost  Typical Savings from On-Demand
No Upfront  None  High  30%
Partial Upfront
 Medium  None  41%
All Upfront
 High  Low  44%


Pros & Cons

The benefit of the “No Upfront” option is just that – you don’t have to provide any cash upfront. However, it is extremely difficult to sell in the Marketplace should client usage change and it isn’t needed.

A “Partial Upfront” reservation has a very low hourly cost and is readily saleable in the Marketplace. But, be prepared to make an upfront cash investment.

An “All Upfront” provides the trifecta: no hourly charge; readily saleable in the Marketplace; and provides the greatest discount from on-demand rates. Compared to a “partial upfront” reservation, this option provides very little additional cost savings. And note: it also requires an upfront cash investment.

And the Final Answer Is …

After years of working with reservations, and conducting analysis, I have found that the “Partial Upfront” option provides the best value.

If you’re still in the dark on the nitty gritty of AWS reservations or need help managing the reservations, feel free to contact me to learn how Parquantix can simplify the process for you (and double your profits), or to inquire about our free trial offer.

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