Concepts
On-Demand Instances allow you to pay for computing capacity by the hour or second (depending on the instance type) with no long-term commitment. This is the most flexible compute option, as it allows you to start and stop instances at any time and only pay for what you use.
Use Cases for On-Demand Instances:
- Flexible workloads that cannot be interrupted
- Applications under development or with uncertain usage patterns
- Short term, sporadic, or unpredictable workloads that cannot be reserved in advance
Reserved Instances (RIs)
Reserved Instances offer you the option to reserve a specific instance type and size in a particular region for one or three years. In exchange for this commitment, AWS offers a significant discount compared to the On-Demand Instance pricing.
Use Cases for Reserved Instances:
- Steady-state or predictable workloads
- Applications requiring reserved capacity
- Users who can commit to using EC2 over a 1-year or 3-year term to reduce their total computing costs
Savings Plans
Savings Plans is a flexible pricing model that offer significant savings over On-Demand pricing, in exchange for committing to a consistent amount of usage (measured in $/hour) for a 1-year or 3-year term. There are two types of Savings Plans: Compute Savings Plans and EC2 Instance Savings Plans.
Use Cases for Savings Plans:
- Users willing to commit to a certain amount of usage for one or three years
- Broadly applicable across multiple regions or instance families
- A mix of instances across services like EC2, Fargate, and Lambda
Spot Instances
Spot Instances let you take advantage of unused EC2 capacity in the AWS cloud at steep discounts—up to 90% off the On-Demand price. Spot Instances can be interrupted by AWS with two minutes of notification when AWS needs the capacity back.
Use Cases for Spot Instances:
- Flexible, stateless, fault-tolerant applications
- Big data and analytics, containerized workloads, CI/CD pipelines
- Workloads that can be stopped and restarted without any critical impact
Comparison Table:
| Purchase Option | Payment Model | Commitment | Best Use Cases |
|---|---|---|---|
| On-Demand Instances | Pay-as-you-go | None | Short-term and unpredictable workloads |
| Reserved Instances | Upfront commitment | 1 or 3 years | Predictable, steady-state usage |
| Savings Plans | Usage commitment | 1 or 3 years | Broad, consistent usage across various services |
| Spot Instances | Bid for capacity | None | Fault-tolerant, flexible workloads |
When selecting between these options, it’s important to analyze your workload patterns and requirements. For example, let’s say you are running a web application that has a consistent baseline load but experiences variable spikes in traffic; you might use a mix of Reserved Instances to cover the baseline and On-Demand or Spot Instances to cover the spikes.
It’s essential to use tools such as the AWS Pricing Calculator to simulate costs based on your anticipated usage, along with AWS Cost Explorer to evaluate and track your current usage and spending. You can also leverage AWS Budgets to set custom budgets to manage your costs and usage.
Overall, choosing the right purchase option is critical for cost optimization in AWS. Each option has a proper place depending on your workload’s nature and your financial strategy. It’s advisable to regularly review your usage patterns and adjust your purchasing strategies as needed.
Answer the Questions in Comment Section
True or False: Amazon EC2 Reserved Instances can provide a discount of up to 75% compared to On-Demand pricing.
- True
- False
Answer: True
Explanation: Reserved Instances offer significant discounts over On-Demand pricing and can provide savings of up to 75%, depending on the term length, payment option, and instance type selected.
Which purchasing option for Amazon EC2 instances requires the least amount of commitment and allows for flexible scaling?
- On-Demand Instances
- Reserved Instances
- Spot Instances
- Savings Plans
Answer: On-Demand Instances
Explanation: On-Demand Instances offer the most flexible pricing option, allowing users to pay for compute capacity by the hour or second with no long-term commitments, thus enabling easy scaling.
True or False: AWS Savings Plans provide the same discounts across all AWS services.
- True
- False
Answer: False
Explanation: AWS Savings Plans offer discounts on specific services, with the discount rate depending on the plan chosen by the user and the specific service used. Savings Plans are primarily tied to Amazon EC2, AWS Lambda, and AWS Fargate.
What feature allows AWS customers to bid for unused EC2 computing capacity at potentially lower costs?
- On-Demand Instances
- Reserved Instances
- Spot Instances
- Dedicated Hosts
Answer: Spot Instances
Explanation: Spot Instances allow users to bid for unused EC2 capacity, often at lower costs than On-Demand pricing, but come with the risk that instances can be terminated by AWS with minimal notice if demand increases.
Which EC2 purchasing option is recommended for applications with predictable usage that require reserved capacity?
- On-Demand Instances
- Reserved Instances
- Spot Instances
- Dedicated Hosts
Answer: Reserved Instances
Explanation: Reserved Instances are ideal for applications with steady state or predictable usage that require reserved capacity, as they offer significant cost savings over On-Demand Instances.
True or False: AWS Spot Instances can be terminated by AWS at any time with a 2-minute notification.
- True
- False
Answer: True
Explanation: AWS can interrupt Spot Instances with a 2-minute notification if the spot price exceeds the user’s bid or if the capacity is needed for other purposes.
Which AWS service allows you to run your application on dedicated physical servers isolated from other AWS accounts?
- Amazon EC2 Instances
- Amazon EC2 Spot Instances
- Amazon EC2 Dedicated Hosts
- AWS Outposts
Answer: Amazon EC2 Dedicated Hosts
Explanation: Amazon EC2 Dedicated Hosts allocate physical servers dedicated for the user’s use case, providing isolation from other AWS accounts, which may be important for compliance reasons.
True or False: AWS automatically applies the cheapest pricing option available for your instance usage.
- True
- False
Answer: False
Explanation: AWS provides various pricing options, but users must choose the most cost-effective option for their use case. AWS will not automatically apply the cheapest option; users must configure their services to utilize options such as Reserved Instances or Savings Plans for discounts.
What is the minimum commitment period for Compute Savings Plans?
- 1 month
- 1 year
- 3 years
- There is no minimum commitment
Answer: 1 year
Explanation: Compute Savings Plans require a 1- or 3-year commitment, with the discount level varying based on the length of commitment and payment option chosen.
Which purchase option is most suitable for workloads with intermittent, unpredictable spikes that might not be sufficiently covered by On-Demand Instances or Savings Plans?
- Unused Reserved Instances
- Spot Blocks
- Spot Instances
- Dedicated Hosts
Answer: Spot Instances
Explanation: Spot Instances are ideal for workloads with intermittent and unpredictable spikes as they offer the ability to bid for unused capacity at lower prices. However, they might be interrupted if demand for capacity rises or the spot price increases beyond the bid price.
This blog post on compute purchasing options for the AWS Certified Cloud Practitioner exam is very informative. Thanks!
Can someone explain the difference between On-Demand and Spot Instances for EC2?
I’m preparing for the CLF-C02 exam. When should I use Reserved Instances over On-Demand Instances?
Is there a price difference between Spot Instances and Savings Plans?
This blog post really helped clear up a lot of confusion for me. Appreciate it!
What are the typical use cases for Spot Instances?
Can someone explain how the pricing for Compute Savings Plans works?
Thanks for the clarification on Reserved Instances!