Billing, Pricing, and Support · Topic 1 of 4
AWS Pricing Models
Compare AWS pricing models for CLF-C02: On Demand, Savings Plans, Reserved Instances, Spot, Dedicated Hosts, the free tier and data transfer charges.
- 5 min
- On Demand has no commitment and suits short or unpredictable workloads.
- Savings Plans and Reserved Instances give discounts for a one or three year commitment.
- Compute Savings Plans are more flexible than Reserved Instances or EC2 Instance Savings Plans.
What it is
AWS does not charge one flat fee. You are billed for the services you use, and many services offer several ways to pay for the same resource.
The basic idea is pay as you go: you use a resource and pay for it, with no long contract. For steady workloads you can commit in return for a lower rate.
The exam focuses on the purchasing options for Amazon Elastic Compute Cloud (EC2), the free offers, and what drives the bill.
How it works
What you pay for
Most services charge for three things: compute time, storage, and data moved out of AWS. Other charges depend on the service, such as requests or database capacity.
Data transferred into AWS is generally free. Data transferred out to the internet is charged, and so is some transfer between Regions.
EC2 purchasing options
| Option | How it works | Best for |
|---|---|---|
| On Demand | Pay by the second or hour with no commitment | Short, unpredictable or first time workloads |
| Savings Plans | Commit to a spend per hour for one or three years for a lower rate | Steady use, with flexibility to change instance details |
| Reserved Instances | Commit to a specific instance configuration for one or three years | Steady use of a known configuration |
| Spot Instances | Use spare capacity at a large discount, but AWS can take it back | Flexible, fault tolerant work such as batch jobs |
| Dedicated Hosts | A physical server reserved for you | Licence rules or compliance that need a dedicated server |
Spot usually has the lowest hourly price, with AWS advertising savings of up to 90 percent compared with On Demand. The catch is interruption, so it suits work that can stop and restart.
Savings Plans and Reserved Instances can be paid all upfront, partially upfront or with no upfront payment. The more you pay early, the lower the effective rate.
Savings Plans compared with Reserved Instances
Both offer discounts for a one or three year term. A Savings Plan is a commitment to a dollar amount of usage per hour, while a Reserved Instance is tied to an instance configuration.
Compute Savings Plans are the most flexible, because they apply across instance families, Regions and services such as AWS Fargate and AWS Lambda. EC2 Instance Savings Plans give a deeper discount in return for being tied to an instance family in a Region.
Reserved Instance flexibility
| Choice | Options |
|---|---|
| Type | Standard gives the larger discount but is fixed to its instance family. Convertible can be exchanged for a different family, operating system or tenancy |
| Scope | A Regional Reserved Instance applies in any Availability Zone in the Region. A zonal one is tied to one Availability Zone and also reserves capacity there |
| Term | One or three years |
If you no longer need a Standard Reserved Instance, you can list it for sale on the Reserved Instance Marketplace. Convertible Reserved Instances cannot be sold there.
Dedicated options
Dedicated Hosts give you a full physical server and let you see the sockets and cores, which helps with licences tied to hardware. Dedicated Instances run on hardware used only by your account but give less control.
The AWS Free Tier
AWS offers free usage in three forms. Always free offers never expire, 12 month free offers apply to new accounts for a year, and short trials last a set time.
AWS has changed the free offer for newer accounts, including credit based plans, and may change it again. The exam uses the three categories above, but check the current rules before relying on any free offer.
Volume discounts and other factors
Some services get cheaper per unit as usage grows. Amazon Simple Storage Service (S3) charges less per gigabyte at higher volumes.
Costs also depend on the Region, the instance type and the storage class. Moving data between Regions or out to the internet adds charges.
Serverless pricing
AWS Lambda charges for requests and run time, so an idle function costs nothing. This pay for use style is common across serverless services.
What to remember for the exam
- On Demand has no commitment and suits short or unpredictable workloads.
- Savings Plans and Reserved Instances give discounts for a one or three year commitment.
- Compute Savings Plans are more flexible than Reserved Instances or EC2 Instance Savings Plans.
- Spot Instances are the cheapest but can be interrupted, so use them for fault tolerant work.
- Dedicated Hosts give a physical server, which helps with server bound licences and compliance.
- Data into AWS is generally free, and data out to the internet is charged.
- The free tier has always free, 12 month and trial offers.
- Costs vary by Region, usage volume and service.
"Can tolerate interruptions" points to Spot. "Steady for three years" points to Savings Plans or Reserved Instances. "Software licence tied to a server" points to Dedicated Hosts.
Common mistakes
Using Spot for critical work. AWS can reclaim Spot capacity, so a critical database should not run on it.
Committing for steady use but buying On Demand. Steady use for a year or more is cheaper with a commitment.
Assuming all data transfer is charged. Inbound transfer is generally free, while outbound is not.
Confusing Dedicated Hosts with Dedicated Instances. A host is a whole physical server you can see into, while instances only guarantee that no other customer shares the hardware.
A commitment is a promise to pay for the term even if you use less. Do not commit before you understand your steady level of use.
Check yourself
Which EC2 option is cheapest but may be interrupted?
Spot Instances.
Which option gives a discount for committing to a spend per hour for one or three years?
Savings Plans.
Is data transferred into AWS generally charged?
No, inbound data transfer is generally free, while outbound transfer to the internet is charged.
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