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Cloud for Beginners | AWS Cloud Practitioner Essentials Course | Part-5

Cloud for Beginners | AWS Cloud Practitioner Essentials Course | Part-5

Nephophilia Diary

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Akash A Benki
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5 min read

I am on my journey to explore and deep dive into this fascinating cloud technology. I started to explore and understand the basic terms of cloud technology and came across the AWS Cloud Practitioner Essentials Course. The instructors in this course are Blaine Sundrud a Senior Instructional Designer, Morgan Willis a Senior Cloud Technologist and Rudy Chetty a Solutions Architect.

In the previous blog, we understood some of the fundamentals of Amazon EC2. In this blog which is Part 5 of my Cloud for Beginners Blog Series, we will understand more about Amazon EC2 Pricing.

Pricing based on Requirements

As we know AWS offers a pay-as-you-go pricing policy, With Amazon EC2, you pay only for the computing time that you use. Amazon EC2 offers a variety of pricing options for different use cases.

For example, if your use case can withstand interruptions, you can save with Spot Instances. You can also save by committing early and locking in a minimum level of use with Reserved Instances.

There are five categories of Pricing that AWS offers its Customers. They are:
1. On-Demand Instances
2. Reserved Instances
3. EC2 Instance Savings Plan
4. Spot Instances
5. Dedicated Hosts

Let’s have a closer look into each one of them:

1. On-Demand Instances

Expensive as demand increases

  • On-Demand Instances are ideal for short-term, irregular workloads that cannot be interrupted. No upfront costs or minimum contracts apply. The instances run continuously until you stop them, and you pay for only the compute time you use.

  • Sample use cases for On-Demand Instances include developing and testing applications and running applications that have unpredictable usage patterns. On-demand instances are not recommended for workloads that last a year or longer because these workloads can experience greater cost savings using Reserved Instances.

2. Reserved Instances

Savings on Reserving with terms

  • Reserved Instances are a billing discount applied to the use of On-Demand Instances in your account. There are two available types of Reserved Instances:
    1. Standard Reserved Instances
    2. Convertible Reserved Instances

  • You can purchase Standard Reserved and Convertible Reserved Instances for a 1-year or 3-year term. You realize greater cost savings with the 3-year option.

  1. Standard Reserved Instances:
    This option is a good fit if you know the EC2 instance type and size you need for your steady-state applications and in which AWS Region you plan to run them. Reserved Instances require you to state the following qualifications:

  • Instance type and size: For example, m5.xlarge

  • Platform description (operating system): For example, Microsoft Windows Server or Red Hat Enterprise Linux

  • Tenancy: Default tenancy or dedicated tenancy

  • You have the option to specify an Availability Zone for your EC2 Reserved Instances. If you make this specification, you get an EC2 capacity reservation. This ensures that your desired amount of EC2 instances will be available when you need them.


2. Convertible Reserved Instances:
If you need to run your EC2 instances in different Availability Zones or different instance types, then Convertible Reserved Instances might be right for you.

Note: You trade in a deeper discount when you require flexibility to run your EC2 instances.

At the end of a Reserved Instance term, you can continue using the Amazon EC2 instance without interruption. However, you are charged On-Demand rates until you do one of the following:

  • Terminate the instance.

  • Purchase a new Reserved Instance that matches the instance attributes (instance family and size, Region, platform, and tenancy).

3. EC2 Instance Savings Plans

Savings on Reserving and Commitment terms

  • AWS offers Savings Plans for a few compute services, including Amazon EC2. EC2 Instance Savings Plans reduce your EC2 instance costs when you make an hourly spend commitment to an instance family and Region for a 1-year or 3-year term.

  • This term commitment results in savings of up to 72% compared to On-Demand rates. Any usage up to the commitment is charged at the discounted Savings plan rate (for example, $10 per hour). Any usage beyond the commitment is charged at regular On-Demand rates.

  • The EC2 Instance Savings Plans are a good option if you need flexibility in your Amazon EC2 usage over the commitment term.

  • You have the benefit of saving costs on running any EC2 instance within an EC2 instance family in a chosen Region regardless of Availability Zone, instance size, OS, or tenancy.

  • Unlike Reserved Instances, however, you don’t need to specify upfront what EC2 instance type and size, OS, and tenancy to get a discount.

  • Further, you don’t need to commit to a certain number of EC2 instances over a 1-year or 3-year term. Also it doesn’t include an EC2 capacity reservation option.

4. Spot Instances

More savings

  • Spot Instances are ideal for workloads with flexible start and end times, or that can withstand interruptions. Spot Instances uses unused Amazon EC2 computing capacity and offers you cost savings at up to 90% off of On-Demand prices.

  • For example: In a background processing job such as a Data processing job for a customer survey, After you have launched a Spot Instance, if capacity is no longer available or demand for Spot Instances increases, your instance may be interrupted. This might not pose any issues for your background processing job.

5. Dedicated Hosts

Dedicated Hosts — Most Expensive

  • Dedicated Hosts are physical servers with Amazon EC2 instance capacity that is fully dedicated to your use.

  • You can use your existing per-socket, per-core, or per-VM software licenses to help maintain license compliance. You can purchase On-Demand Dedicated Hosts and Dedicated Hosts Reservations.

  • Of all the Amazon EC2 options that were covered, Dedicated Hosts are the most expensive.

Therefore, selecting the right type of pricing based upon the specific needs is very important for the Businesses (Organizations). With the proper analysis, more savings could be made which could bring many benefits to the Organizations.

In the next blog, we will understand more about AWS EC2 Scaling and much more. Stay tuned.

Thank you for reading my blog so far. Give it a Clap if you loved it and stay tuned for more blogs.

To learn more about AWS EC2 Pricing checkout the below link:

AWSAmazon EC2Cloud ComputingAWS Cloud PractitionerCloud