Understanding AWS EC2 Pricing Plans

Understanding AWS EC2 Pricing Plans

On-demand instances offer flexibility and require no long-term commitments. This is the most flexible option, ideal for short-term workloads


4 min read

The cloud has revolutionized how businesses approach computing resources. Amazon EC2, a core service of Amazon Web Services (AWS), offers a scalable and cost-effective solution for virtual servers. However, understanding EC2 pricing can be a daunting task for businesses looking to leverage its capabilities efficiently. In this blog post, we'll delve into the intricacies of Amazon EC2 pricing to help you navigate through the options and make informed decisions.

On-Demand Instances: Pay as You Go

On-demand instances offer flexibility and require no long-term commitments. This is the most flexible option, ideal for short-term workloads or spiky traffic. With this pricing model, you pay for compute capacity by the hour or by the second, depending on the instance type and region. While On-Demand Instances offer the highest level of flexibility, they can be relatively more expensive compared to other purchasing options, especially for steady-state workloads. On-demand pricing can be the most expensive in the long run.

Reserved Instances: Cost Optimization through Commitments

Reserved Instances (RIs) allow you to reserve EC2 capacity for a specified term, typically one or three years, in exchange for significant discounts (up to 72%) compared to On-Demand pricing. RIs are well-suited for workloads with predictable usage patterns, offering significant cost savings over the long term. AWS provides various options within Reserved Instances, including Standard RIs, Convertible RIs, and Scheduled RIs, each catering to different requirements and offering different levels of flexibility in terms of instance size, family, and availability zone.

Spot Instances: Leveraging Spare Capacity for Cost Savings

Spot Instances enable you to bid for unused EC2 capacity, offering substantial cost savings (up to 90% discount) compared to On-Demand Instances. However, Spot Instances come with the risk of interruption, as AWS can reclaim the capacity with short notice if the Spot price exceeds your bid. The price can fluctuate based on supply and demand, and your instances can be interrupted if needed by AWS. Hence, Spot Instances are best suited for fault-tolerant workloads or tasks that can be interrupted or rescheduled.

Difference Between All AWS EC2 Plans

Pricing ModelPriceCommitmentFlexibilityInterruptions
On-Demand InstancesMost expensiveNo commitmentHigh (any instance type, region, OS)No
Savings PlansDiscounted (up to 72% off on-demand)1 or 3 yearsModerate (choose instance family and OS)No
Reserved Instances (RIs)Most Discounted (up to 75% off on-demand)1 or 3 yearsLow (specific instance type, region, OS)No
Spot InstancesLeast expensive (up to 90% off on-demand)No commitmentHigh (any instance type, region, OS)Yes

Additional Cost Factors

While EC2 instance pricing forms the core of cost considerations, several other factors can impact your overall expenses:

  • Data Transfer: While data transfer within the same region for certain AWS services is free, egress fees apply for transferring data out of AWS or between regions.

  • Storage: Storage associated with your EC2 instances, like Amazon EBS volumes, is billed separately.

Learn More AWS EC2 Pricing - https://aws.amazon.com/ec2/cost-and-capacity/


By understanding the different EC2 pricing models and exploring optimization strategies, you can leverage the power of the cloud without breaking the bank. Remember, the most cost-effective solution depends on your specific needs. So, experiment, analyze, and find the perfect balance for your cloud journey!

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