AWS announces new savings plans to reduce complexity of reserved instances

Reserved instances (RIs) have provided a mechanism for companies, which expect to use a certain level of AWS infrastructure resources, to get some cost certainty. But as AWS’ Jeff Barr points out, they are on the complex side. To fix that, the company announced a new method called Savings Plans.

“Today we are launching Savings Plans, a new and flexible discount model that provides you with the same discounts as RIs, in exchange for a commitment to use a specific amount (measured in dollars per hour) of compute power over a one or three year period,” Barr wrote in a blog post announcing the new program.

Amazon charges customers in a couple of ways. First, there is an on-demand price, which is basically the equivalent of the rack rate at a hotel. You are going to pay more for this because you’re walking up and ordering it on the fly.

Most organizations know they are going to need a certain level of resources over a period of time, and in these cases, they can save some money by buying in bulk up front. This gives them cost certainty as an organization, and it helps Amazon because it knows it’s going to have a certain level of usage and can plan accordingly.

While Reserved Instances aren’t going away yet, it sounds like Amazon is trying to steer customers to the new savings plans. “We will continue to sell RIs, but Savings Plans are more flexible and I think many of you will prefer them,” Barr wrote.

The Savings Plans come in two flavors. Compute Savings Plans provide up to 66% savings and are similar to RIs in this regard. The aspect that customers should like is that the savings are broadly applicable across AWS products, and you can even move workloads between regions and maintain the same discounted rate.

The other is an EC2 Instance Savings Plan. With this one, also similar to the reserved instance, you can save up to 72% over the on-demand price, but with this option you are limited to a single region. It does offer a measure of flexibility though, allowing you to select different sizes of the same instance type or even switch operating systems from Windows to Linux without affecting your discount with your region of choice.

You can sign up today through the AWS Cost Explorer.