More clearly explains On Demand, Reserved, and Spot instances. Part of a much larger, 5+ hour course at http://bit.ly/learn-aws/ (this is deck 0307 of the course). NOTE: Some info is outdated in here.

1. Pricing Model for EC2
• 3 ways to pay
– On Demand
– Reservation
– Spot
• You get exact same instance in each case
• Pricing is just a billing construct
• In each case, capacity is not guaranteed (even for
reservations)
– AWS has (rarely) run out of capacity in their data centers
EC2

2. Pricing Model makes HUGE difference
• 70%+ of your AWS bill will be EC2
• Leveraging different models, you can pay
70%+ less for the exact same instance
EC2

3. On Demand
• Highest cost
• No up-front commitment
EC2

4. Reserved
• Pay up-front “reservation” fee
• In exchange for lower hourly fee
• (Possibly) lowest cost for dedicated
instance (spot can be taken away)
• 1 and 3 year terms available
• Restrictive. Reservation must include:
– AZ
– Instance type
– Platform
– Term (1 or 3 years)
EC2

5. Reserved
…Think “Plan” EC2
Plan Down Payment Hourly Cost
None $0 $1.00
Platinum $100 $0.30
Gold $60 $0.50
Silver $30 $0.80

6. Reserved
Billing 1st Payment Hourly Cost
On Demand $0 $1.00
High Usage $100 $0.30
Medium Usage $60 $0.50
Low Usage $30 $0.80
EC2
High Usage is charged as always on! 24x7x365
…Now Reality (almost)

7. Reserved
Billing Term 1st Payment Hourly Cost
On Demand N/A $0 $1.00
High Usage 3yr $100 $0.30
High Usage 1yr $90 $0.35
Medium Usage 3yr $60 $0.50
Medium Usage 1yr $50 $0.60
Low Usage 3yr $30 $0.80
Low Usage 1yr $20 $0.90
…Full reality (complicated as ever)

8. On Demand + Reserved
• Mixing gives good balance of
– Cost savings
– Flexibility
EC2
0
50
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#Servers
Load
Load
RESERVED
ON DEMAND

9. How do I apply Reservations?
• You don’t, AWS does
• If you have a reservation for an instance of:
– Specific Type, AZ, OS
– AWS applies the reservation billing automatically
– You always are charged lowest rate possible
– (or are you)?
EC2

10. On Demand cheaper than Reserved?
• AWS continues to cut pricing
– 21 times in last 4 years
• Some customers observed that over 3 years, On
Demand could be cheaper!
• Past Performance != Future
EC2

11. What if I buy the wrong Reservation?
You can now sell (and buy) unused reservations
http://aws.amazon.com/ec2/reserved-instance/marketplace
EC2

12. Spot Instances
• On Demand & Reserved are “stable”
– AWS cannot shut your servers down
• Not so with spot!
• Spot instances:
– You bid for unused capacity in a data center
– If your bid is filled, you get the instance
– If spot price goes above your bid, you lose that instance
– …without warning
– AWS determines the spot price
EC2

13. Spot Instances
• On Demand & Reserved are “stable”
– AWS cannot shut your servers down
• Not so with spot!
• Spot instances:
– You bid for unused capacity in a data center
– If your bid is filled, you get the instance
– If spot price goes above your bid, you lose that instance
– …without warning
– AWS determines the spot price
EC2
Why would anyone
ever want to use spot?!

14. Spot Use Cases
EC2
• Batch jobs
• Offline processing
• Big Data analysis
– EMR (Hadoop in AWS can use spot for worker nodes)
• Throw-away environments
– Testing, development
• Buffering user-facing web traffic
– Very advanced use case!

15. On Demand + Reserved + Spot
• Spot serves peak
EC2
0
50
100
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RESERVED
ON DEMAND
SPOT

16. Spot Best Practices
EC2
• Break work into smallest pieces possible
• Return useful results ASAP
– Minimize data copy in & out (like SETI@Home)
• If using to “serve peak”:
– Set bid price high
– Fail over to On Demand if bid not fulfilled

17. Spot Instances
• Historical prices available
– From console (EC2 dashboard)
– Programmatically (consume API via scripts)
EC2

18. Spot Instances
• Spot prices get bid up
– For short periods of time
– Mainly by scientific & financial institutions
EC2

19. Use Case: On Demand
• New to AWS
– Not yet sure which AZ and instance type you’ll use long-term
– Not sure if you’ll stay with AWS
• New products (daily usage curve unknown)
• Buffering known curves (Reserved serves most)
• Prototyping
• You feel EC2 price trend line will continue
EC2

20. Use Case: Reserved
• Established with AWS
– You know exactly which AZ and instance type you’ll use long-term
• Established products (daily usage curve known)
• Buffering known curves (Reserved serves base)
EC2

21. Choose Pricing Wisely
• Start slow with On Demand
• Add in reservations as it makes sense
• Investigate ways to use Spot
• Keep watching AWS pricing
• Keep re-calculating “cheapest” option
EC2

22. Pricing Model for EC2
• 3 ways to pay
– On Demand
– Reservation
– Spot
EC2