AWS Reserved Instances FAQ

This AWS Reserved Instances FAQ is a culmination of questions we are often asked about using Reserved Instances to save on your Amazon Web Services (AWS) costs.

First, let’s make sure you’re all on the same page. AWS Reserved Instances are a way to save money on your cloud bill by reserving capacity in advance, which you can choose to pay for all, some, or no upfront. Due to the different billing model and variety of options, these often raise questions.  Let’s explore a few:

Q1: How do I know which instances are reserved?

Because of how AWS billing works, Reserved Instances aren’t applied until you’re actually being charged for the instances. Think of it more like a “voucher” than a specific virtual machine.

This means that you run your instances as you normally would throughout the month, without seeing which will be billed as reserved vs. on-demand. When your bill comes on the 5th of the next month, AWS will look at your reservations and your usage and automatically apply the reservations that match the instances.

This means that you don’t have to decide which instances are reserved, but it also means you don’t have the visibility into what your true costs are going to be. You’ll have to track this on your own, or use some tools to help you manage your Reserved Instances. AWS has included some reports in the Cost Explorer that can help you visualize your month-to-date usage of your reservations.

Q2: What if I don’t need that instance type anymore?

There’s a couple of options for unused reservations, depending on the reason you aren’t using them anymore. The first option is to sell the reservation on the Reserved Instance Marketplace. This marketplace lets you list your reservation and allows others to purchase it from you. The reservations are grouped together, with the cheapest being sold first in that group. Once someone purchases your reservation, you start getting charged at the on-demand rate (if you still use that type).

The other option is to purchase convertible reservations, which allow you to change the attributes of the reservation (as long as it’s to a more expensive instance type). These convertible types give you much more flexibility, especially as your company or application are growing in use, but they do come with a smaller savings rate over standard Reserved Instances.

Q3: How do Reserved Instances work if I have multiple AWS accounts?

Many users of AWS in large organizations have started using a multi-account strategy, either for security reasons or billing reasons. When managing multiple AWS accounts, billing and reservations can get confusing. The good news is that reservations can “float” across multiple linked accounts, even if they weren’t purchased in the master account. Amazon is smart enough to attempt to apply the reservation to the account it was purchased in, but if a suitable instance is not found, it can apply it to an instance in a different account that matches. You can also choose to exclude linked accounts from receiving these floating reservations if you’d like.

Q4: Are AWS Reserved Instances better than On Demand?

Great question. This is actually the subject of the most popular post on the ParkMyCloud blog. In short: usually yes, but only for production environments. Otherwise, On Demand instances with on/off schedules are typically better value.

Conclusion

Reserved Instances can help save a lot of money on your AWS bill, but require a different way of thinking about your instances than the normal pay-as-you-go that you may be used to with cloud computing. These reservations are typically used for steady-state workloads with consistent usage. Did we miss any of your questions in this AWS Reserved Instances FAQ? Let us know!


About Chris Parlette

Chris Parlette is the Director of Cloud Solutions at ParkMyCloud. Chris helps customers reduce their cloud waste and manage their hybrid infrastructures by drawing on his years of experience working at various software startups. From SaaS to on-prem, virtualization to cloud, monitoring tools to cloud management platforms, and small businesses to large enterprises, Chris has seen it all and loves helping drive improvements to IT management. Chris earned a BS in Computer Science from the University of Maryland. He and his wife, Megan, reside in Silver Spring, MD.

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