Following our previous discussion on AWS Savings Plans, let's explore another powerful cost optimization tool: AWS Reserved Instances (RIs). AWS Reserved Instances can provide significant discounts (up to 72%) compared to On-Demand pricing, making them a crucial component of any AWS cost optimization strategy.
AWS Reserved Instances
AWS Reserved Instances offer a billing discount on the usage of On-Demand instances when you commit to a specific instance type for a one or three-year term. Unlike physical or virtual machines, AWSReserved Instances are ideal for steady and predictable workloads, providing significant savings—up to 72%—compared to On-Demand pricing. While AWS Savings Plans are often recommended for EC2 workloads due to their flexibility, AWS Reserved Instances remain a key cost-saving strategy for other AWS services.
AWS Services Supporting Reserved Instances
- Amazon EC2: Compute instances
- Amazon RDS: Database instances
- Amazon Redshift: Data warehouse clusters
- Amazon ElastiCache: In-memory caching
- Amazon OpenSearch: Search and analytics
- Amazon MemoryDB: In-memory database
- Amazon DynamoDB: Reserved capacity
Note: For EC2 workloads, AWS Savings Plans are now the recommended choice over AWS Reserved Instances due to their greater flexibility and similar discount levels. However, AWS Reserved Instances remain valuable for other AWS services listed above.
Instance Attributes
AWS Reserved Instances are defined by the following instance attributes that must match your usage to receive the discount:
- Instance Type: The specific instance family and size of your resource (e.g., db.r6g.xlarge for RDS, ra3.xlarge for Redshift)
- Region: The AWS Region where the Reserved Instance is purchased
- Platform/Engine: The specific platform or engine type:
- For RDS: MySQL, PostgreSQL, Oracle, SQL Server, etc.
- For Redshift: RA3, DC2, DS2, etc.
- For ElastiCache: Redis, Memcached
- Tenancy: Whether the resources run on shared or dedicated hardware (where applicable)
Note: The specific attributes vary by service. For example, RDS Reserved Instances include database engine type, while Redshift Reserved Instances include node type specifications.
EC2 Reserved Instance Offering Classes
For EC2 Reserved Instances specifically, AWS offers two distinct offering classes:
- Standard Reserved Instances
- Offers the highest discount levels (up to 72%) for steady-state EC2 workloads
- Requires commitment to:
- Specific instance type (e.g., m5.xlarge)
- Operating system
- Region and Availability Zone (if applicable)
- Best for stable, predictable EC2 workloads
- Limited flexibility but highest cost savings
- Convertible Reserved Instances
- Provides more flexibility with slightly lower savings (up to 66%)
- Allows modifications to:
- EC2 instance family and size (e.g., m5.xlarge to m5.2xlarge)
- Operating system
- Region (where supported)
- Ideal for evolving workloads where compute needs might change
- Can be exchanged for other Convertible AWS Reserved Instances with different configurations
Note: These offering classes are specific to EC2 Reserved Instances. Other AWS services that support AWS Reserved Instances (like RDS, ElastiCache, etc.) have their own reservation models and modification rules. For EC2 instances Savings Plans are recommended over EC2 Reserved Instances.
Understanding AWS Reserved Instance Attributes
AWS Reserved Instances have several key attributes that affect their pricing and flexibility:
Scope
AWSReserved Instances come in two scope types that determine their flexibility and capacity reservation capabilities:
- Regional Reserved Instances
- Provides broader flexibility across your AWS Region
- Key benefits:
- Automatically applies discounts across all AZs in the region
- Supports instance size flexibility within the same family
- Allows purchase queueing for better planning
- No capacity reservation
- Best for: Organizations prioritizing cost savings and deployment flexibility
- Zonal Reserved Instances
- Provides guaranteed capacity in a specific Availability Zone
- Key benefits:
- Guarantees compute capacity in the selected AZ
- Offers the same discount levels as Regional Reserved Instances
- Provides predictable placement for compliance requirements
- Limitations:
- No instance size flexibility
- No purchase queueing
- Discount applies only in the specified AZ
- Best for: Workloads requiring guaranteed capacity or specific AZ placement
Pro Tip: Choose Regional Reserved Instances for AWS cost optimization and flexibility, and Zonal Reserved Instances when capacity guarantees are crucial for your workload.
Payment Options
-
No Upfront:
- No upfront cost
- Higher monthly payments
- Lowest total discount
-
Partial Upfront:
- Balanced approach
- Medium initial payment
- Moderate monthly payments
- Better discount than No Upfront
-
All Upfront:
- Highest initial cost
- No monthly payments
- Maximum discount
Term Commitment
AWSReserved Instances require a commitment to a specific term length:
- One-Year Term
- 12-month commitment
- Lower discount compared to 3-year term
- Better for evolving workloads
- Good balance between savings and flexibility
- Ideal when:
- Technology changes are expected
- Workload requirements may shift
- Testing new services or configurations
- Three-Year Term
- 36-month commitment
- Maximum discount potential (up to 72%)
- Best for stable, long-term workloads
- Ideal when:
- Using mature, stable services
- Running core business applications
- Operating predictable workloads
Pro Tip: Consider mixing term lengths - use 3-year terms for stable core workloads and 1-year terms for evolving applications to balance maximum savings with flexibility.
RI Modifications and Exchanges
Modifying AWSReserved Instances
Both Standard and Convertible Reserved Instances can be modified, though modification options vary by service. When your modification request succeeds:
- The modified reservation becomes effective immediately
- The pricing benefit applies starting at the hour of the modification request
- The original reservation is retired
- The modified reservation shows a $0 fixed price (the original fixed price is not carried over)
Common modification options across AWS services include:
- Change Availability Zone within the same Region
- Change scope between Availability Zone and Region (where supported)
- Changing from zonal to regional loses capacity reservation benefit
- Changing from regional to zonal loses flexibility benefits
- Adjust resource specifications (varies by service)
Modification Requirements
- Reserved Instance must be active
- Cannot modify at the same time as purchase
- No pending modification requests
- Not listed in the Reserved Instance Marketplace
- All AWSReserved Instances being modified must expire in the same hour
- Modifications take effect immediately
- No modification fees apply
Exchanging Convertible Reserved Instances
Only Convertible Reserved Instances can be exchanged. Through exchanges, you can typically change:
- Resource configurations (e.g., instance type)
- Service-specific attributes (e.g., database engine for RDS)
- Payment option (e.g., No Upfront to Partial Upfront)
Exchange Requirements
- Reserved Instance must be active
- At least 24 hours must remain before expiration
- Must be within the same Region
- Can merge multiple Reserved Instances into one new Reserved Instance
- Payment option flexibility:
- All Upfront and Partial Upfront AWS Reserved Instances can be exchanged both ways
- No Upfront AWS Reserved Instances can only be exchanged for equal or higher-priced options
- Term requirements:
- Single AWS Reserved Instance exchange must maintain the same term (1-year or 3-years)
- When merging multiple AWS Reserved Instances with different terms, the new AWS Reserved Instance will have a 3-year term
- The new AWS Reserved Instance must have equal or higher value than the original AWS Reserved Instances
Exchange Process
- AWS calculates the list value of your current AWS Reserved Instance(s)
- Compares it with the desired new AWS Reserved Instance configuration
- Provides the number of resources you can receive
- May require a true-up cost for any value difference
Important: After the exchange, the end date of the old reservation and start date of the new reservation will be set to the exchange date. For example, exchanging a three-year reservation with 16 months remaining results in a new 16-month reservation.
Note: Specific modification and exchange options vary by AWS service. Consult the service-specific documentation for detailed information about supported modifications and exchanges.
Cost Management and Optimization
Best Practices
- Regular utilization monitoring using AWS Cost Explorer
- Use RI Coverage and Utilization reports
- Consider splitting larger AWS Reserved Instances into smaller denominations
- Combine with AWS Savings Plans for optimal coverage
- Use Auto Scaling groups to maintain high AWS Reserved Instance utilization
Getting AWS Reserved Instance Recommendations
Via AWS Console
- Open AWS Cost Explorer
- Navigate to "Reservations" → "Recommendations"
- Configure filters:
- Service (e.g., EC2, RDS, Redshift, etc.)
- Term (1 or 3 years)
- Payment Option (No Upfront, Partial Upfront, All Upfront)
- Offering Class (Standard, Convertible) only for EC2
- Lookback period (7, 30, or 60 days)
- Review and purchase recommended AWS Reserved Instances from the service specific console
Via AWS API
You can programmatically get AWS Reserved Instance recommendations using the AWS Cost Explorer API:
What's Next?
For more details and FAQs on AWS Reserved Instances you can refer to the AWS products page. In Part III of this series, we'll explore AWS Compute Optimizer and how it can help you right-size your resources for optimal AWS cost optimizations.