Jake’s Cost Optimization Dilemma
Jake has been running AWS workloads for a while now, but he notices his on-demand EC2 costs are adding up. He hears about Saving Plans and Reserved Instances (RI) as ways to reduce costs, but he’s not sure which one to choose.
Alex, his mentor, sees Jake struggling with cost calculations and says, “Think of AWS pricing like choosing a gym membership. Different plans offer different levels of commitment and flexibility.”
The Gym Membership Analogy
“Imagine you want to join a gym,” Alex continues. “You have two main options: a prepaid membership or a flexible discount plan.”
1. Reserved Instance (RI) – Prepaid Gym Membership
- Commitment-based discount model for EC2, RDS, ElastiCache, and more.
- Requires commitment for 1-year or 3-year terms.
- Available in Standard RI (bigger discounts, less flexible) and Convertible RI (lower discounts, more flexibility).
- Best for stable, predictable workloads.
Example: Reserved Instances are like a prepaid gym membership. You pay upfront (or partially upfront) for a set period, which makes it cheaper than paying per visit. But if your schedule changes, you may not fully use it.
2. Saving Plan – Pay-as-You-Go Discount Plan
- More flexible pricing model that applies discounts across multiple instance types, regions, and even AWS services.
- Requires commitment to spending a fixed amount per hour for 1 or 3 years.
- Available in Compute Saving Plans (widely flexible) and EC2 Instance Saving Plans (less flexible but bigger discounts).
- Best for dynamic workloads that may change over time.
Example: Saving Plans are like a pay-as-you-go gym discount plan. You commit to spending a certain amount per month, but you can use any gym location and attend different types of classes.
Side-by-Side Comparison
| Feature | Reserved Instance (RI) | Saving Plan |
|---|---|---|
| Commitment Type | Specific instance type, region | Spending commitment (flexible resources) |
| Flexibility | Fixed instance family & region | Applies to multiple instance types & regions |
| Discount Level | High (especially for Standard RI) | Moderate (but applies broadly) |
| Best Use Case | Stable, predictable workloads | Dynamic, changing workloads |
| Services Covered | EC2, RDS, ElastiCache, etc. | EC2, Fargate, Lambda |
SAA Exam Practice Question
Question: You are running an application with workloads that fluctuate between EC2, AWS Fargate, and Lambda. You want to reduce costs while keeping flexibility. Which AWS pricing model should you choose?
A) Standard Reserved Instance
B) Convertible Reserved Instance
C) Compute Saving Plan
D) Spot Instances
Answer: C) Compute Saving Plan – because it applies discounts across multiple AWS compute services, making it the best choice for dynamic workloads.
Conclusion
Jake now understands:
- Reserved Instances are like prepaid gym memberships—great for predictable usage but not very flexible.
- Saving Plans are like flexible discount plans—offering discounts without locking into specific instances.
“Thanks, Alex! Now I can choose the best cost-saving strategy for my workloads.”
And with that, Jake takes another step toward AWS mastery! 🚀