Tutorial / Cram Notes
Reserved Instances provide a way to reserve EC2 computing capacity for a fixed term – one or three years – in return for a significantly discounted hourly rate compared to On-Demand pricing. This makes RIs ideal for workloads with steady-state usage.
Types of RIs:
- Standard RIs: They offer up to 75% off On-Demand prices and can be modified in terms of instance size within the same instance family.
- Convertible RIs: They come with a lower discount (up to 54%) but offer the flexibility to change the RI’s instance family, OS, tenancy, or payment option.
Payment Options:
- All Upfront: Pay for the entire RI term with one initial payment.
- Partial Upfront: Split the cost into an upfront payment and the rest is paid throughout the term.
- No Upfront: No upfront cost; the discounted rate is applied throughout the RI term.
Savings Plans
Savings Plans are a flexible pricing model that provides a discount in exchange for a commitment to a consistent amount of usage (measured in $/hour) over a one or three-year period.
Types of Savings Plans:
- Compute Savings Plans: Provide up to 66% savings, are applicable to any EC2 instance family, region, OS, or tenancy, and can even cover usage across AWS Fargate and AWS Lambda.
- EC2 Instance Savings Plans: Offer up to 72% savings, are specific to a single region and instance family, but allow you to change instance size, OS, and tenancy.
Spot Instances
Spot Instances allow users to take advantage of unused EC2 capacity at a discount of up to 90% off the On-Demand price. However, these instances can be terminated by AWS with just a two-minute notification if AWS needs the capacity back, making them suitable for fault-tolerant and flexible workloads.
Use Cases for Spot Instances:
- Batch processing jobs
- State-less, non-critical web servers
- Background processing
- Workloads with flexible start and end times
Comparing the Options
Below is a comparison table that reflects key differences among these purchasing options:
| Purchasing Option | Discount Range | Commitment | Flexibility | Use Case |
|---|---|---|---|---|
| Reserved Instances | Up to 75% | 1 or 3 years | Medium (Size/Family) | Steady-state workloads |
| Savings Plans | Up to 72% (EC2), 66% (Compute) | 1 or 3 years | High (Region/Family/Service) | Predictable usage pattern |
| Spot Instances | Up to 90% | None | High (Can be interrupted) | Flexible, fault-tolerant workloads |
Best Practices
To harness the benefits of these purchasing options effectively, Solutions Architects should:
- Analyze Workloads: Understand the nature and requirements of workloads to select the most appropriate purchasing option.
- Monitor Usage: Keep track of instance usage and cost, potentially using AWS Cost Explorer and AWS Budgets to make informed decisions.
- Combine Strategies: Use a mix of Reserved Instances, Savings Plans, and Spot Instances based on different workload needs to maximize cost optimizations.
- Maintain Flexibility: For businesses with changing needs, lean towards Savings Plans and Spot Instances to maintain the flexibility in instance usage and commitment.
In conclusion, AWS offers various purchasing options tailored to fit diverse workload patterns and budget considerations. Reserved Instances, Savings Plans, and Spot Instances provide AWS Certified Solutions Architect – Professionals with sharp tools in their belt for designing cost-efficient, scalable, and highly available systems on AWS infrastructure. Understanding the intricacies of these options, analyzing cloud spend and usage, and strategically implementing the most suitable purchasing strategy can result in substantial cost savings and improved budget management for organizations.
Practice Test with Explanation
True or False: Reserved Instances require upfront payment for the entire reservation period.
- False
Reserved Instances offer several payment options, including no upfront, partial upfront, or all upfront. You are not required to pay for the entire reservation period upfront.
True or False: Savings Plans provide a discount on usage, regardless of instance family, region, or operating system.
- False
Some types of Savings Plans, like Compute Savings Plans, provide flexibility across instance family, region, or operating system, while others, like EC2 Instance Savings Plans, apply to a specific instance family within a region.
What pricing model allows AWS customers to use unused EC2 compute capacity at reduced rates?
- A) On-Demand Instances
- B) Reserved Instances
- C) Savings Plans
- D) Spot Instances
Answer: D) Spot Instances
Spot Instances allow customers to take advantage of unused EC2 capacity at up to a 90% discount compared to On-Demand prices.
True or False: With EC2 Reserved Instances, the reservation is tied to a specific Availability Zone.
- False
Standard Reserved Instances can be applied to any Availability Zone in the region. Zonal Reserved Instances (which provide capacity reservation) are tied to a specific Availability Zone.
Which AWS purchasing option is suitable for workloads with unpredictable spikes that are not time-sensitive?
- A) On-Demand Instances
- B) Reserved Instances
- C) Savings Plans
- D) Spot Instances
Answer: D) Spot Instances
Spot Instances are ideal for workloads with flexible start and end times or that can withstand interruptions, hence suitable for unpredictable spikes as long as the work isn’t time-sensitive.
True or False: AWS Savings Plans are applied to your account automatically based on the term and usage.
- True
Savings Plans offer a discounted rate in exchange for a commitment to a consistent amount of usage (measured in $/hour) over a 1 or 3 year period, and the discount is applied automatically to the account’s usage.
True or False: AWS Reserved Instances can be sold in the AWS Marketplace if they are no longer needed.
- True
AWS provides the flexibility to sell unused Reserved Instances in the AWS Marketplace, allowing recovery of some costs if your needs change.
What is a key difference between Reserved Instances and Savings Plans?
- A) Reserved Instances provide flexible scaling options.
- B) Savings Plans offer discounts on any instance configuration.
- C) Reserved Instances can be applied to any instance family.
- D) Savings Plans cannot be cancelled once purchased.
Answer: B) Savings Plans offer discounts on any instance configuration.
Savings Plans offer greater flexibility than Reserved Instances as they provide discounts on any instance configuration across regions (Compute Savings Plans) and generally do not tie you to specific instance types.
Multiple Select: Which of the following are valid purchasing options for Amazon EC2 instances? (Select TWO)
- A) Demand Instances
- B) Convertible Reserved Instances
- C) Automated Instances
- D) Scheduled Instances
- E) Preemptible Instances
Answer: B) Convertible Reserved Instances, D) Scheduled Instances
Convertible Reserved Instances provide the option to change the attributes of the RI as long as the exchange leads to creating RI’s of equal or greater value. Scheduled Instances are reserved instances that run on a schedule.
True or False: Spot Instances are recommended for fault-tolerant and flexible applications.
- True
Spot Instances are a cost-effective choice for workloads that can be interrupted and are capable of handling failures, thus perfect for fault-tolerant and flexible applications.
Which AWS purchasing option allows you to commit to a consistent amount of usage (measured in dollars per hour) in exchange for a discounted hourly rate?
- A) On-Demand Instances
- B) Reserved Instances
- C) Savings Plans
- D) Spot Instances
Answer: C) Savings Plans
AWS Savings Plans provide a reduced hourly rate (up to 72% discount), in exchange for a commitment to a specific amount of usage (in $/hour) for a 1 or 3 year period.
Interview Questions
Can you explain the primary difference between Reserved Instances and Savings Plans in AWS?
Reserved Instances (RIs) provide a discount compared to On-Demand pricing by committing to a specific instance type in a particular region for a term of one or three years. Savings Plans, on the other hand, offer more flexibility by allowing customers to commit to a certain amount of compute usage (measured in $/hour) for a one or three-year period, across any AWS region and instance family, and automatically apply discounts to the most cost-effective usage.
What are the payment options available for AWS Reserved Instances and how do they affect the discount level?
AWS Reserved Instances offer three payment options: All Upfront, Partial Upfront, and No Upfront. The All Upfront option provides the highest discount level because you pay the entire cost upfront. The Partial Upfront offers a lower discount with part of the cost paid upfront and the rest over the term. The No Upfront option offers the lowest discount and does not require any upfront payment.
How can Spot Instances benefit cost-optimization for workload management on AWS?
Spot Instances allow you to take advantage of unused EC2 capacity in the AWS cloud at a discount of up to 90% compared to On-Demand prices. They are ideal for flexible, stateless, fault-tolerant, or time-insensitive workloads, enabling organizations to optimize costs by running these workloads at a much lower price.
What happens to your application when a Spot Instance is terminated by AWS, and how should one architect solutions to handle this?
When AWS terminates a Spot Instance (e.g., when the Spot price exceeds the bid price), the instance is given a two-minute warning before it’s stopped or terminated. Architecting solutions to handle this involves using checkpointing, queueing workloads, or using Spot Instance interruption notices to gracefully handle shutdowns and migrate workloads to other instances.
Can you combine the benefits of Reserved Instances and Savings Plans? If so, how does AWS prioritize these discounts?
Yes, you can combine the benefits of Reserved Instances and Savings Plans. AWS applies the discount as follows: Reserved Instance discounts are applied first, then any applicable Savings Plans rates. If additional usage is not covered by either, then On-Demand rates are charged.
What are the types of Savings Plans offered by AWS, and what are their key differences?
There are two types of Savings Plans: Compute Savings Plans and EC2 Instance Savings Plans. Compute Savings Plans provide the most flexibility, applying to any EC2 instance regardless of region, instance family, operating system, or tenancy. EC2 Instance Savings Plans are more specific, offering savings on specific instance families in a particular region but still accommodating changing usage with different sizes within that family.
What should an AWS customer consider when deciding between purchasing a Standard or Convertible Reserved Instance?
An AWS customer should consider their need for flexibility versus cost savings. Standard Reserved Instances offer a higher discount but less flexibility, as they cannot be modified or exchanged during their term. Convertible Reserved Instances offer lower discounts but can be exchanged for other instance types, operating systems, or tenancies, which is beneficial if the customer anticipates changing requirements.
How does AWS handle the unused portion of a Reserved Instance if a customer decides to stop using it before the term ends?
If a customer stops using a Reserved Instance before the term ends, they have options such as selling the remaining term in the Reserved Instance Marketplace (subject to certain conditions) or continue paying for the RI without utilizing it. AWS does not provide a refund for the unused portion directly.
Describe how a Spot Fleet works in the context of managing Spot Instances.
A Spot Fleet is a collection of Spot Instances and, optionally, On-Demand Instances that aim to meet the target capacity specified by the user with a combination of instance types and pricing models. The Spot Fleet attempts to launch the lowest-price combination of instances to meet the capacity and other criteria like performance specified by the user while handling interruptions gracefully by attempting to maintain the target capacity.
With regards to EC2 Instances, what are the main considerations when selecting between On-Demand Instances, Reserved Instances, Savings Plans, and Spot Instances?
The main considerations include cost optimization, commitment term, workload flexibility, and interruption tolerance. On-Demand Instances are the most flexible with no upfront commitment but are the most expensive. Reserved Instances and Savings Plans offer cost savings with term commitments, while Spot Instances offer the highest cost savings but can be interrupted by AWS with little notice. The choice depends on the nature of the workload and the organization’s financial strategies.
What are some strategies to effectively manage and optimize costs when using a combination of On-Demand, Reserved Instances, Savings Plans, and Spot Instances in an AWS environment?
Effective cost management in AWS can be achieved by using a diversified portfolio of purchasing options tailored to match the workload characteristics. For steady-state, predictable workloads, use Reserved Instances or Savings Plans. For flexible or fault-tolerant workloads, leverage Spot Instances. On-Demand Instances should be used for short-term, irregular, or unpredictable workloads. Regularly review and adjust your commitments based on changing usage patterns and utilize tools like AWS Cost Explorer and AWS Budgets for monitoring and optimizing costs.
How does AWS’s Reserved Instance Marketplace work, and what are its benefits for customers?
The AWS Reserved Instance Marketplace is a platform where customers can sell their unused or partially used Reserved Instances to other AWS customers. The benefit for sellers is the ability to recover some value from their unused commitments, while buyers can obtain shorter-duration Reserved Instances, often at discounted rates.
Thanks for the great post on AWS purchasing options!
Very informative blog post.
Can someone explain how exactly Reserved Instances work? I’m a bit confused about the upfront costs.
Appreciate the detailed explanation on Savings Plans. Quite useful.
What are the key differences between Savings Plans and Reserved Instances?
I’ve found Spot Instances to be quite useful for batch processing tasks.
Spot Instances are indeed cost-effective, but how do you manage the interruptions?
Great summary of AWS purchasing options. Helped me a lot.