© 2017, Amazon Web Services, Inc. or its Affiliates. All rights reserved.

Pranesh Ramalingam, Senior Product Manager, EC2

March 28, 2017

Getting the Most Out of EC2 Reserved Instances:More Flexibility and Lower Costs

- Reserved Instances Overview

- Types of RIs: Standard and Convertible

- Scope of RIs : Zonal and Regional

- New! Instance Size Flexibility on RIs

- Application of RIs to instance usage

Agenda

Overview of Reserved Instances

On-Demand Pay for compute

capacity by the hour with no long-term

commitments

For spiky workloads, or to define needs

ReservedMake a 1 or 3 Year Commitment and

receive a significant discount over on-

demand

For committed or baseline utilization

SpotBid for unused capacity, charged at a Spot Price which fluctuates based on supply and demand

For fault tolerant, time-insensitive or transient

workloads

EC2 Purchasing Options

Reserved Instances Overview

What is a Reserved Instance (RI)?

• RIs provide you with a significant discount (up to 75%) compared to On-Demand instance pricing when you commit to a particular instance family within a region. This RI discount can then be applied across all of your accounts within your consolidated billing family (which has now migrated to AWS Organizations).

• RIs can also provide you with a capacity reservation for either one or three years, ensuring that you are always able to launch your instances when you want

• This capacity reservation only applies to the sub-account in which it is purchased. If you buy an RI with a capacity reservation, we recommend buying RIs in the (sub-) accounts where they are most needed. That way, you have the reservation and still maximize the billing benefit across all accounts.

Reserved Instance Payment Options

The No Upfront option provides a discount compared to On-Demand (up to 55% off) and does not require an upfront payment.

• Low hourly rate for the RI for every hour in the term regardless of usage

The Partial Upfront option balances the payments of an RI between upfront and hourly and provides a higher discount (up to 76%) compared to the No Upfront option.

• Lower hourly rate for every hour in the term regardless of usage

With the All Upfront option you benefit from the highest discount compared to On-Demand (up to 77% off)

• Full upfront payment with no additional usage fees for the hours used via the RI during the term

Reserved Instance Volume Discounts

RI Volume Discounts are based on the total list value (non-discounted) for the active RIs you have per region. Your total list value is the sum of all expected payments for an RI within the term, including both upfront and recurring hourly payments.

Types of RIs

Standard Reserved Instances• A Standard RI offers you the most amount of

discount when you commit to a 1 year or 3 year term

• 3 Year RIs offer a higher discount as compared to a 1 Year RI

• You can purchase a Standard RI by specifying the instance type (e.g. m4.xlarge), OS (e.g. Windows), Tenancy (e.g. Default) and AZ (optional)

Convertible Reserved InstancesWith a Convertible RI, you can modify your existing reservation across:

Instance families

Instance sizes

Operating Systems

Tenancy

Convertible Reserved Instances

With a Convertible RI you can:

Convert to a new instance family e.g. R3 to C3 to T2 to M4

Convert to a new instance price e.g. if AWS reduces the public rate of your instances

Convert to a new operating system e.g. Windows to Linux

Convert to a new instance size

Convertible Reserved Instances

Contd…

Convert tenancy e.g. from Dedicated Instances to default

Convert to a different payment option e.g. No Upfront to Partial Upfront

Convertible Reserved Instances: True-Up• Exchanges of Convertible RIs require that the new configuration be

of equal or greater value than the remaining value of your existing RIs

• If you are exchanging Convertible RIs to a cheaper instance type or to take advantage of EC2 price cuts, you will be able to obtain additional instances in order to maintain the same value of your contract

• If the total value of the new configuration exceeds your existing RI asset value, you may be required to pay the difference. This is called the true-up charge

Am I Convertible?

Converting via the console

Converting via the console

Scope of RIs: Zonal and Regional RIs

Any RI (Standard or Convertible RI) that is purchased for a specific AZ is known as a Zonal RI. Zonal RIs provide both a billing discount and a capacity reservation in the AZ you specify (we need to know the AZ so we know where to reserve capacity!), giving you additional confidence in your ability to launch instances when you need them.

Zonal RI

• Any RI (Standard or Convertible) that is purchased for a particular region is known as a Regional RI.

• Regional RIs do not offer a capacity reservation but provide broader applicability of the RI’s discount rate and make it easier to take advantage of the RI’s discounted rate.

• With regional RIs, your RI discount can by applied automatically to any AZ (this is known as AZ flexibility) within a particular AWS Region or to any instance size within an instance family (this is known as instance size flexibility…more on this later).

Regional RI

• When an RI (Standard or Convertible) purchased for an AZ, it is called as a Zonal RI and when the RI (Standard or Convertible) is purchased for a region, these are called as Regional RIs.

• Regional RIs offer greater flexibility and make it easier for you to take advantage of the RI’s discounted rate. This reduces management overhead of trying to match the instance usage to the RI or purchasing the right RI to match your instance.

• You can always modify between Regional and Zonal RIs depending on whether you require a capacity reservation

• There is no price difference between Regional and Zonal RIs

Regional vs. Zonal RIs

• Value billing discount over capacity reservation

• Broader applicability of RI discounts

• Purchasing RIs in Payer Account

Consider Regional RIsif…

Purchasing Regional RIs

Am I Regional?

Modifying to Regional

New! Instance Size Flexibility

Instance Size Flexibility

• As of March 2017, Linux/Unix Regional RIs with default tenancy offer instance size flexibility in addition to AZ flexibility

• EC2 uses the scale shown along side, to compare different sizes within an instance family. In the case of instance size flexibility on RIs, this scale is used to apply the discounted rate of RIs to the normalized usage of the instance family. 

• Example: Let’s say you own an m4.xlarge Linux/UNIX regional RI with default tenancy in US East (N.Virginia). Then this RI’s discounted rate can automatically apply to two m4.large instances in us-east-1a or half of an m4.2xlarge instance in us-east-1b

Normalization Factor in the Console

Instance size flexibility in the CUR

Let’s say that you purchase a m4.xlarge Linux RI with default tenancy in us-east-1 and you launch two m4.large Linux instances with default tenancy in the us-east-1a AZ. Since the RI purchased provides instance size flexibility, it will apply to the usage of the two m4.large instances.

lineItem/LineItemType

lineItem/ProductCode

lineItem/UsageStartDate

lineItem/UsageType lineItem/Description

lineItem/ResourceID

lineItem/UsageAmount

lineItem/NormalizationFactor

lineItem/NormalizedUsageAmount

lineItem/UnblendedRate

lineItem/UnblendedCost

reservation/ReservationARN

reservation/TotalReservedUnits

reservation/TotalReservedNormalizedUnits

RIFee AmazonEC2 2016-01-01T00:00:00Z HeavyUsage: m4.xlarge

USD 0.0618 hourly fee per Linux/UNIX (Amazon VPC), m4.xlarge instance 8 46

arn:aws:ec2:us-east-1:572481847476:reserved-instances/f8c204c1-dd48-43f1-adb8-f38aa61e0dea 744 5952

Discounted Usage AmazonEC2 2016-01-01T00:00:00Z BoxUsage:m4.large

Linux/UNIX (Amazon VPC), m4.xlarge reserved instance applied i-1bd250bc 1 4 4 0 0

arn:aws:ec2:us-east-1:572481847476:reserved-instances/f8c204c1-dd48-43f1-adb8-f38aa61e0dea

Discounted Usage AmazonEC2 2016-01-01T00:00:00Z BoxUsage:m4.large

Linux/UNIX (Amazon VPC), m4.xlarge reserved instance applied i-1df340ed 1 4 4 0 0

arn:aws:ec2:us-east-1:572481847476:reserved-instances/f8c204c1-dd48-43f1-adb8-f38aa61e0dea

Instance size flexibility in the CUR

Let’s say you have two m4.large Linux RIs with default tenancy in us-east-1 and you launch an m4.xlarge Linux instance with default tenancy in us-east-1a for an hour. Since the RIs you purchased provide instance size flexibility, they will apply to the m4.xlarge instance.

lineItem/LineItemType

lineItem/ProductCode

lineItem/UsageStartDate

lineItem/UsageType lineItem/Description

lineItem/ResourceID

lineItem/UsageAmount

lineItem/NormalizationFactor

lineItem/NormalizedUsageAmount

lineItem/UnblendedRate

lineItem/UnblendedCost

reservation/ReservationARN

reservation/TotalReservedUnits

reservation/TotalReservedNormalizedUnits

RIFee AmazonEC2 2016-01-01T00:00:00Z HeavyUsage: m4.large

USD 0.0309 hourly fee per Linux/UNIX (Amazon VPC), m4.large instance 4 23

arn:aws:ec2:us-east-1:572481847476:reserved-instances/f8c204c1-dd48-43f1-adb8-f38aa61e0dea 744 2976

RIFee AmazonEC2 2016-01-01T00:00:00Z HeavyUsage: m4.large

USD 0.0309 hourly fee per Linux/UNIX (Amazon VPC), m4.large instance 4 23

arn:aws:ec2:us-east-1:527398342324:reserved-instances/d6f809c4-ff23-43f9-adb8-f38cc61e9poe 744 2976

Discounted Usage AmazonEC2 2016-01-01T00:00:00Z BoxUsage:m4.xlarge

Linux/UNIX (Amazon VPC), m4.large reserved instance applied i-1bd250bc 0.5 8 4 0 0

arn:aws:ec2:us-east-1:572481847476:reserved-instances/f8c204c1-dd48-43f1-adb8-f38aa61e0dea

Discounted Usage AmazonEC2 2016-01-01T00:00:00Z BoxUsage:m4.xlarge

Linux/UNIX (Amazon VPC), m4.large reserved instance applied i-1bd250bc 0.5 8 4 0 0

arn:aws:ec2:us-east-1:527398342324:reserved-instances/d6f809c4-ff23-43f9-adb8-f38cc61e9poe

Application of RIs to instance usage

How RIs get applied• Reserved Instances are automatically applied to running EC2 instances that

match the Reserved Instance attributes. • Zonal RIs are applied before Regional RIs to achieve higher RI utilization • RIs are applied to instances in the purchasing account, and any unused RIs

are applied to usage in other linked accounts• In the case RIs that offer instance size flexibility, there is no instance size

affinity

Scenario 1A customer has the following instances running:

• 4 x m3.large Linux, default tenancy instances in Availability Zone us-east-1a• 2 x m4.xlarge Linux, default tenancy instances in Availability Zone us-east-1b• 1 x c4.xlarge Linux, default tenancy instances in Availability Zone us-east-1c

The customer has the following RIs:

• 4 x m3.large Linux, default tenancy RIs in Availability Zone us-east-1a (zonal RI)• 4 x m4.large Linux, default tenancy RIs in us-east-1 (regional RI)• 1 x c4.large Linux, default tenancy RIs in us-east-1 (regional RI)

RI benefits are applied as follows:

• The 4 m3.large RIs in us-east-1a provide a capacity reservation and billing discount to the m3.large instances running in the same AZ

• 4 m4.large RIs are regional, and provide AZ and instance size flexibility. Therefore they apply to the usage of the 2 m4.xlarge instances

• 1 c4.large RI is regional, and provides AZ and instance size flexibility. Given the normalization factor differences, the c4.large RI applies to partial usage of c4.xlarge instance.

Scenario 2A customer has the following instances:

Account A

1 x m4.xlarge Linux, default tenancy instances in Availability Zone us-east-1a

Account B

1 x m4.xlarge Linux, default tenancy instances in Availability Zone us-east-1b

The customer has the following RIs:

Account A1 x m4.xlarge Linux, default tenancy RIs in us-east-1 (regional RI)

Account C1 x m4.xlarge Linux, default tenancy RI in us-east-1a (zonal RI)

RI benefits are applied as follows

•The discount of the m4.xlarge zonal RI owned by account C is applied to the m4.xlarge usage in account A.•The discount of the m4.xlarge regional RI owned by account A is applied to the m4.xlarge usage in account B.

Scenario 3A customer has the following instances:

•2 x c4.xlarge Linux, default tenancy instances in Availability Zone us-east-1a•1x c4.2xlarge Linux, default tenancy instances in Availability Zone us-east-1b

The customer has the following RIs:

• 1 x c4.2xlarge Linux, default tenancy RIs in us-east-1 (regional RI)

RI benefits are applied as follows

•The discount of the c4.2xlarge RI can apply to either the c4.2xlarge instance or the 2 c4.xlarge instance, depending on which usage is detected first by the AWS billing system. There is no preference given to a particular instance size.

Summary• Choosing the best RI type for your needs will allow you to maximize cost

savings for the degree of flexibility you need on your EC2 usage• Standard RIs offer the deepest discount for steady-state workloads that you

are able to forecast usage for• Convertible RIs allow you to modify your RIs across families, operating

systems, payment plans, and tenancies in exchange for a 3-year commitment

• Zonal RIs offer a capacity reservation for the instance matching the RI specification in the given AZ.

• Regional RIs offer you broader applicability of your RI discount. Regional RIs offer AZ flexibility and instance size flexibility which makes it easier for you to take advantage of your RI’s discount and reduces management overhead.

Thank you!