Looking to reduce your AWS costs? Save up to $750k with these guidelines!

TL;DR: We will reduce AWS EC2 spend in 4 main ways: Reserved Instances, Savings Plans, Rightsizing, and Spot.

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Reserved Instances

Reserved Instances provide a significant discount (up to 72%) compared to On-Demand pricing. Reserved Instances are best suited for stateful apps that can’t be disrupted.

Pros:

• Frictionless transition — no code changes, no deployment changes, no environment changes. The only thing that changes is your billing (which decreases).
• No maintenance — purchase a Reserved Instance and simply renew 1 or 3 years later.

Cons:

• Could make scaling up difficult depending on your organization’s scale-up strategy.
• You can’t rightsize or modify your instance later on (Convertible RIs allow for some more flexibility at a reduced discount).
• If you decide to stop using a RI in the middle of an agreement, you’ll still need to pay off the rest of your agreement (unless you can sell your RI on the RI Marketplace).

If you decide to purchase a Reserved Instance, examine your instance usage and that instance’s role in your organization. Reserved Instances done right can save your organization up to 72% — but if done incorrectly, can become a DevOps nightmare.

Steps to complete in AWS console:

1. Go to your AWS console and choose “EC2”.

2. Choose “Reserved Instances”

3. Choose a configuration that matches the on-demand instance you want to convert to a Reserved Instance, then click “Search”.

4. Choose “Add to Cart”, then choose “Order”. That’s it, you’re done. If you’ve chosen a configuration that matches an existing On-Demand EC2, AWS will automatically apply the RI savings to that instance.

Savings Plans (specifically Compute Savings Plans)

Savings Plans are also capable of producing significant savings (up to 72% according to AWS) compared to On-Demand pricing. Savings Plans is a newer savings product by AWS meant to hedge some of the risks of purchasing a Reserved Instance.

Pros:

• You commit to a certain $ value/hour in usage for a period of time (1 or 3 years) and get a discount on that value over that period of time.
• Scales — The hourly rate you commit to applies to charges for all of your EC2s in all of your regions.

Cons:

• There does not exist a Savings Plans marketplace (unlike Reserved Instances).
• If you end up reducing your bill to less than your Savings Plans commitment, you will continue to pay the same amount until your Savings Plans reaches its expiry.

Steps to complete in AWS console:

1. Go to your AWS console and choose “EC2”.

2. Choose “Savings Plans”

3. Choose “Purchase Savings Plans”.

4. Choose “Add to cart”, then choose “Submit order”.

Either determine the commitment amount manually or use the AWS Cost Management tool if you’d like AWS’s recommendation for how much you should commit.

Rightsizing

Rightsizing an On-Demand instance is probably the 2nd easiest change you can take to decrease your organization’s AWS spend. Rightsizing works by matching an optimal instance to an existing EC2’s compute.

Pros:

• No risk — you get all the benefits of On-Demand AND you save money
• Scale up or down easily anytime (no matter your organization’s scale strategy)
• No maintenance — no need to redeploy code or change any configuration

Cons:

• If you manually rightsize, you risk rightsizing to an instance that can’t handle your previous instance type workload.
• If you manually rightsize, you risk terminating an instance that may seem inactive.

Steps to complete in AWS console:

1. Go to your AWS console and choose “EC2” (choose the region you want to be in).

2. Choose an instance you’d like to rightsize

3. Click “Actions” > “Instance Settings” > “Change Instance Type”

If you’d like to use AWS’s suggestions for rightsizing,

Spot Instances

Spot Instance allocation strategies differ from org to org. A spot instance can produce discounts of up to 90% on your AWS EC2 bills.

Pros:

• Flexible — change instance type, region, terminate, etc at any time.
• Spots produce the most substantial savings.

Cons:

• Spots can be disrupted at any time (AWS provides a 2 minute warning, though).
• Applications that require persistent state and are not fault tolerant will not work for Spots.

Please read AWS’s user guide for steps:

https://docs.aws.amazon.com/AWSEC2/latest/UserGuide/spot-fleet.html