Among the various ways to lose money on idle or orphaned resources in the cloud, here’s another for AWS users to add to the list: unused reserved Instances. At first, the idea of wasting money on AWS Reserved Instances seems counterintuitive. After all, aren’t RIs meant to save money? The short answer is yes – but only if you use them efficiently.

How Unused Reserved Instances Occur

To understand how unused Reserved Instances contribute to cloud waste, consider how they work. With AWS Reserved Instances, you’re making a commitment of usage by renting instances for a fixed amount of time in exchange for a lower rate (per-hour or per-second) than on-demand. You’re still free to use all the same families, OS types, and instance sizes with either one, except with RIs your ability to use certain instance types is limited to the purchasing plan you choose.

The only real difference between an AWS On-Demand instance and an AWS Reserved Instance is how you get billed for them on the backend – and this is where it gets tricky. You don’t know if your Reserved Instances have been used until you get the bill. Instead, you run your instances as you always would, with no insight into what will get billed as reserved instances. It’s only when your bill is created the following month that AWS reviews your reservations alongside your usage to apply the Reserved Instances that match up with your workload. This leaves you with little visibility into what your costs will be, forcing you to track usage on your own, and running the risk of unused reservations that result in, you guessed it – wasted money.

Ways to Avoid Losing Money Unused Reserved Instances

Reserved Instances require commitment of usage, ongoing awareness and insight into your future costs, and the possibility of going unused if AWS can’t apply them sufficiently. But that doesn’t mean you should shy away from using them. Reserved Instances can be cost-effective if used with a few things in mind:

Pick the RI type that suits your usage and workload. The best plan is one of prevention. Before you get started with purchasing reservations, get a detailed look at your usage and the most optimal instance types for your workload (something you should already be doing as part of your cost control measures). By design, Reserved Instances work best with steady state workloads and consistent usage. Once you confirm that your usage makes you a good candidate, you’ll want to choose the RI instance type that will benefit your needs most:

  • Standard RIs – Recommended for steady-state usage, and provide the most savings.
  • Convertible RIs – a smaller discount from On-Demand instances, but in return provide flexibility to change families, OS types, and tenancies.
  • Scheduled RIs – similar to Standard RIs, but only apply to instances launched within the time windows you select, which can recur on a daily, weekly, or monthly schedule.

Sell unused reserved instances on the Reserved Instance Marketplace. Using the marketplace allows you to list your reservation for purchase by other users. The cheapest reservations are sold first, and once someone purchases yours, you’ll be the charged the on-demand rate whenever you use that instance type moving forward.  

Purchase convertible reservations. With convertible reservations, you have the option to convert your reserved instances to other types, so long as the new type is more expensive. You won’t get as much of a discount, but flexibility and more options for use make up for the smaller savings.

The Lesson to be Learned

Just like any other idle or unused cloud resource, unused reserved instances can only do one thing – waste your money. Cloud services were meant to help you keep infrastructure costs in check, but only if you use them smartly. Does all this sound complex to manage? That’s because it is. Take the DIY route by keeping an eye on your infrastructure, or put our automated solution to work and check out our Reserved Instance manager.

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