On Demand, Reserved, Spot and Dedicated Instances in AWS

AWS EC2 Instance Pricing

As we all know AWS ( Amazon web services ) is the leading cloud platform today. So if you need to launch a new application, you can go with this cloud platform without touching things on your premises. Because using AWS makes the things easier. It reduces time, costs, and increases the durability with high availability like features for your instances. But before everything you must know AWS EC2 Pricing plans.

What is an EC2 instance ?

EC2 ( Elastic cloud computing ) is just servers as we all know which is in the cloud. Which means inside of AWS Data Centers. These server comes with fully loaded resources but with different capacities. Some may be optimizing for memory ( More RAM ) some may be for Storage and some may be for Compute. Like wise there are different types of EC2 Instances have introduced by AWS to their users to select the best instance for your use cases. Refer AWS EC2 Instance types for more details.

Amazon EC2 Pricing

AWS Free Tier

Within AWS Free Tier period it includes 750 hours of Linux and Windows t2.micro instances each month for 1 complete year ( 12 months ). Within the Free Tier, you have to use only EC2 Micro instances. For more information about free teir period refer AWS Free Tier.

There are four ways to select how we can pay for our instances.
  1. On Demand
  2. Reserved Instances
  3. Spot Instances
  4. Dedicated Instances

On Demand

With On Demand Instances, you can pay per second or per hour for the resources. Per second or Per hour may be varied with the instance types that you use. In this pricing category, you dont need to pay for any upfront or don’t need to have a long term commitment. On Demand pricing method suits for basically Developers who run the applications for the first time, for testing purposes. In here you can build and destroy instances ant any time as you need. You don’t have to pay more or less. Only thing is you have to pay for what you use only. Applications which could have high work loads, unpredictable spikes can be tested here.  Users who prefer low cost, can use On demand pricing method.

Reserved Instances

In Reserved Instance Pricing it gives you a 75% discount of On Demand Pricing. This is charged hourly. This category suits for applications which should be in having steady state usage, should have reserved capacity. Compared to On Demand, here customer can pay either no upfront, partial upfront or a complete upfront. Also customer is committing 1 year contract or 3 year contract. The more discount you can have with more upfront and longer contract period.  In Reserved Instances it is having instance attributes like Availability zone, Instance family, Platform, Term, Tenancy, Offering class likewise. Under this category, there are two offering classes.
  1. Standard
  2. Convertible
Standard Reserved Instances :
Offers 1-3 year contract
Able to modify the instance attributes like availability zone, instance size ( within the same type ).
Can be sold out in instance marketplace
Convertible Reserved Instances :
Offers 1-3 year contract
Able to exchange a convertible instance with another having different instance attributes.
Can’t be sold out in instance marketplace

Spot Instances

In this category, customers have to bid for the instances. These instances are cheaper than On demand pricing since spot instances are unused EC2 instances. You are charged hourly. This price is called the spot price. This is recommended for applications which have flexible start and end times. Sometimes your applications can be interrupted also. These are basically used for data analysis, background processing likewise. Spot instance pool is a set of spot instances having the same instance attributes.
When you request for a spot instance, you have to provide an amount as the hourly charge for the spot instance. If you didn’t mention a hourly rate, EC2 takes normal On Demand pricing as your maximum hourly price. If your amount exceeds the spot price, AWS will consider your request if capacity is available. When you request, can mention a clear duration of time for the instance. Spot instance will be interrupted automatically if your maximum price is less than the spot price. Since these are hourly charged, if the instance is terminated from AWS side, you are not charged if the time is in mid of a hour. As an example, AWS terminates your spot instance at 9.15 a.m. You are not charged for the 9th hour. But if you are the one who terminates your spot instance at 9.15 a.m then you are charged for the 9th hour also.

Dedicated Instances

These are physical EC2 instances in AWS. This allows you to use your external software licenses like Oracle, Microsoft SQL Server, Linux. This can be purchased hourly as On demand. Can be purchased as Reserved Instances as well ( 70% off from On Demand )
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