AWS has two main pricing models: On-Demand billing and Reserved billing.

Unlike On-Demand, AWS Reserved Instances let you spare cloud resources for future use. But you can only reserve instances within one availability zone.

There’s usually a discount for Reserved Instance pricing in exchange for long-term commitments. These commitments can last anywhere from one to five years.

The fact that there are discounts for RIs doesn’t mean they’re ineffective. RIs are ideal for steady and long-term processes that don’t need an interruption. In fact, they have the same capacity as On-Demand Instances.

How to Pay for Reserved Instances

You can pay for Reserve Instances in three ways: Total Upfront, Partial Upfront, and No Upfront.

  • Total Upfront: The total upfront option requires paying the total amount on your agreement in one installment. This will usually save you the trouble of getting payment reminders every month. AWS applies the heaviest discount on this option. Use the total upfront option if you’re sure that you’ve made accurate calculations of the required cloud capacity.
  • Partial Upfront: If you feel like the total costs are too high, AWS has a partial payment plan. With partial upfront, users pay a deposit followed by monthly installments. Unlike total upfront payments, partial payments are more flexible and affordable. In addition, they help you test Reserved Instances.
  • No Upfront: This has the least applied discount. You only pay monthly installments after testing some AWS services for free.

In addition, AWS has volume discounts for Reserved Instances. If you reserve instances worth $500,000 and above, you get a 5 percent upfront discount. This discount doubles for those who reserve instances worth more than $4 million. Even large enterprise clients can contact AWS for a custom discount, provided their reservations are worth more than $10 million.

You can easily save big by using the total upfront payment or team up to get upfront volume discounts.

Why Reserved Instances Are the Best Pricing Option

Reserved Instances allow users to get heavy discounts, unlike other pricing models. If you choose Spot Instances with a 90 percent discount, you’re setting yourself up for interruptions. On-Demand Instances are 72 percent more expensive than Reserved Instances. So if you can estimate the quantity of EC2 instances needed over the long term, Reserved Instances are your best option.

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How Much Can You Save with AWS Reserved Instances?

Here is a closer look at how much you can save with AWS Reserved Instances.

Save 65 percent to 72 percent: We’ve already seen how AWS users can save anywhere from 65 percent to 72 percent by using Reserved Instances. These savings are available because users commit to using RIs within one availability zone for a long time.

Save Up to 10 percent: These are savings that come from upfront volume discounts. The longer the years of commitment, the more likely you are to receive upfront discounts. Ten percent of large volumes means significant cost savings that you could use for other cloud operations.

Save 27 percent to 32 percent: These savings depend on whether you’ll choose Total Upfront payments or Partial Upfront payments.

Save Time: AWS is now helping organizations get maximum uptime by dispersing risk across availability regions. If there’s a downtime on one server, you can leverage Reserved Instances in another region for maximum uptime.

Saving with nOps ShareSave Solution

The nOps ShareSave solution can help AWS users easily save money on Reserved Instances. With RIs, it’s easy to choose longer terms because you want heavier discounts. ShareSave removes the risk of overcommitment while maintaining big savings. ShareSave is an automation tool that can adjust your commitment terms based on your current usage. It’s a real-time application, making necessary adjustments on your behalf.

Learn more about how the nOps ShareSave solution can help you manage Reserved Instances.