3.2.2.1. EC2 Purchasing Options: Spot, Reserved, Savings Plans

💡 First Principle: Diverse EC2 purchasing options fundamentally exist to optimize compute costs by aligning pricing with workload characteristics: predictability, duration, and tolerance for interruption.

EC2 purchasing options fundamentally exist to optimize compute costs by aligning pricing with workload characteristics: predictability, duration, and tolerance for interruption. This allows users to maximize efficiency and minimize expenditure.

Amazon EC2 offers multiple ways to pay for compute capacity, allowing you to optimize costs based on your workload's predictability and flexibility.

Key EC2 Purchasing Options:

• "On-Demand Instances": Pay for compute capacity by the second (or hour) with no long-term commitments. Ideal for irregular workloads, development/testing, and applications with unpredictable short-term demand.
• "Spot Instances": Leverage unused EC2 capacity and offer significant discounts (up to 90%) compared to On-Demand prices. Ideal for flexible, fault-tolerant, and interruption-tolerant workloads (e.g., batch jobs, testing, stateless web servers), as instances can be interrupted by AWS with a 2-minute warning.
• "Reserved Instances (RIs)": Provide a discounted hourly rate for specific EC2 instances in exchange for a 1- or 3-year commitment. Offer substantial discounts (up to 75%) in exchange for a commitment. Best for steady-state, predictable workloads such as databases or critical applications with consistent usage.
• "Savings Plans": A flexible pricing model that offers significant discounts (up to 72%) on compute usage in exchange for a 1- or 3-year commitment to a consistent amount of compute usage, measured in $/hour. Applies across EC2, Fargate, and Lambda usage, providing more flexibility than RIs while still ensuring significant cost reduction.

Scenario: For instance, use Spot Instances for fault-tolerant batch processing to achieve significant savings, while Reserved Instances suit stable, long-running production databases for predictable cost reduction.

Visual: EC2 Purchasing Options

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Key Trade-Offs:

• Cost Savings vs. Flexibility/Interruption Risk: Spot Instances offer maximum savings but can be interrupted. RIs and Savings Plans offer high savings for commitment but reduce flexibility compared to On-Demand.

Reflection Question: How do workload characteristics (e.g., predictability, fault tolerance) directly influence the optimal EC2 purchasing strategy for cost efficiency, and what are the trade-offs involved with each option?