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Choosing an AWS Savings Plan

|January 7, 2020|

Amazon recently announced the rollout of their new AWS Savings Plans, a new way to reduce your cloud compute costs. These allow you to achieve the discounts associated with their popular Reserved Instances (up to 72% off on-demand pricing) without having to engage in the headache of managing the same. With the new plans, you would commit to a particular hourly spend of your choosing on either a 1 year or 3 year fixed term. Any compute usage up to that commitment is provided at the discounted rate, while any spend beyond simply reverts to the on-demand pricing model, enabling your company to save money on AWS. This article will help you choose which AWS Savings Plan is right for your business.

Also check out our list of 5 AWS cost saving steps.


Types of AWS Savings Plans 

Within the overarching AWS savings plan umbrella, two slightly different options are available:

EC2 Savings Plan 

The first is called the EC2 Instance Savings Plan, which provides the highest discounts (the same as standard RIs) at the expense of flexibility. These plans are mutable across Size, OS, and tenancy—so while you’ll be able to seamlessly switch, for example, from using a m5.xl running Windows to a m5.2xl running Linux, you won’t be able to switch across instance family, say from a p2 to an m5. 

Compute Savings Plan 

For those who need more flexibility, AWS offers a Compute Savings Plan which offers nearly the same discount level (66% vs. 72%) but imposes fewer constraints. Selections within the Compute Savings Plan are malleable across Instance Family, Region, OS, Tenancy, and even the specific Compute Service. For example, you could transfer your cost savings from an EC2 p2.xlarge instance running Linux in US West Oregon to running AWS Fargate in US East Ohio. This gives you a plethora of options for what you can spend your purchased compute time on, allowing you greater diversity in the projects you take on and to which your savings apply.

Additional Discounting

Beyond the specific savings plan you choose to elect, you can also stretch your dollar further by committing to either a partial upfront or full upfront payment of the contracted costs which wraps additional discounts into your purchased compute time. This is a tradeoff that every business must individually assess based on their budgetary constraints at the time of purchase.


What Do AWS Savings Plans Mean for You? 

So what does this all mean for you, beyond the clear takeaway that saving money on AWS is now easier than ever? First of all, you can stop buying reserved instances and consider selling yours on the marketplace if you want to be free of them sooner than later.  Planning and managing your utilization is far simpler than with reserved instances, so a tool like AWS Cost Explorer can help you stay on top of it. This alleviates the need for reliance on the costly and complex RI cost optimizers and frees you up to focus on what’s important in the cost equation: building high-margin products and features that deliver value to your customers. 


How CloudZero Can Help:

CloudZero builds on the AWS Cost Explorer tool by helping you connect cloud costs with engineering metrics, so you can understand how and why your costs are changing—and what you're spending to fuel your products, features, development teams, and more. Ultimately, CloudZero will inform your decisions about where to invest your cloud spend and how you can improve your margins.  If you're using AWS Savings Plans, you'll be able to correlate specific applications to usage levels, so you can better establish your hourly spend commitment. Plus, once you’re locked into that hourly spend, you’ll be able to take advantage of CloudZero’s alerting, so you will receive anomaly alerts and regular spend updates. With this level of awareness, you’ll be able to ensure that your cloud-hosted applications are running to their maximum efficiency without ever going over-budget.

As the AWS landscape shifts, businesses need to keep up or risk being left behind. CloudZero can help.

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