AWS offers several pricing models that Solutions Architects must understand to optimize costs for new solutions. The primary models include On-Demand, Reserved Instances, Savings Plans, Spot Instances, and Dedicated Hosts.
On-Demand pricing provides maximum flexibility with no upfront commitments.…AWS offers several pricing models that Solutions Architects must understand to optimize costs for new solutions. The primary models include On-Demand, Reserved Instances, Savings Plans, Spot Instances, and Dedicated Hosts.
On-Demand pricing provides maximum flexibility with no upfront commitments. You pay by the hour or second for compute capacity, making it ideal for unpredictable workloads, development environments, or applications with short-term spikes. However, this model carries the highest per-unit cost.
Reserved Instances (RIs) offer significant discounts (up to 72%) compared to On-Demand pricing in exchange for a 1 or 3-year commitment. Three payment options exist: All Upfront (maximum discount), Partial Upfront, and No Upfront. RIs are perfect for steady-state workloads with predictable usage patterns. Standard RIs provide the best discount, while Convertible RIs allow flexibility to change instance families.
Savings Plans provide similar discounts to RIs with more flexibility. Compute Savings Plans apply across EC2, Fargate, and Lambda regardless of instance family, size, or region. EC2 Instance Savings Plans offer deeper discounts but are limited to specific instance families within a region.
Spot Instances leverage unused EC2 capacity at discounts up to 90% off On-Demand prices. They suit fault-tolerant, flexible workloads like batch processing, data analysis, and containerized applications. However, instances can be interrupted with two-minute notice when AWS needs capacity back.
Dedicated Hosts provide physical servers dedicated to your use, supporting compliance requirements and existing server-bound software licenses. They are the most expensive option but necessary for specific regulatory or licensing scenarios.
When designing solutions, architects should combine these models strategically. Use Reserved Instances or Savings Plans for baseline capacity, On-Demand for variable workloads, and Spot Instances for fault-tolerant batch processing. This hybrid approach optimizes costs while maintaining application reliability and performance requirements.
Pricing Models Comparison - AWS Solutions Architect Professional Guide
Why Pricing Models Comparison is Important
Understanding AWS pricing models is critical for the AWS Solutions Architect Professional exam because cost optimization is a fundamental pillar of the AWS Well-Architected Framework. As a solutions architect, you must design solutions that balance performance, reliability, and cost-effectiveness. Questions on pricing models test your ability to recommend the most economical approach while meeting business and technical requirements.
What are AWS Pricing Models?
AWS offers several pricing models to accommodate different workload patterns and business needs:
1. On-Demand Instances Pay for compute capacity by the hour or second with no long-term commitments. Best for unpredictable workloads, short-term projects, or applications being developed and tested.
2. Reserved Instances (RIs) Commit to 1 or 3-year terms for significant discounts (up to 72% compared to On-Demand). Available in three payment options: - All Upfront (highest discount) - Partial Upfront (moderate discount) - No Upfront (lowest discount but still cheaper than On-Demand)
Types include Standard RIs and Convertible RIs (which allow changing instance families).
3. Savings Plans Flexible pricing model offering up to 72% savings. Two types: - Compute Savings Plans: Apply across EC2, Fargate, and Lambda - EC2 Instance Savings Plans: Apply to specific instance families in a region
4. Spot Instances Purchase unused EC2 capacity at up to 90% discount. Instances can be interrupted with a 2-minute warning. Ideal for fault-tolerant, flexible workloads like batch processing, data analysis, and CI/CD.
5. Dedicated Hosts Physical servers dedicated to your use. Required for software licenses with per-socket or per-core licensing requirements. Available On-Demand or Reserved.
6. Dedicated Instances Instances running on hardware dedicated to a single customer but without visibility into the underlying host.
How Pricing Models Work Together
Effective cost optimization often combines multiple pricing models:
- Use Reserved Instances or Savings Plans for baseline, steady-state workloads - Add On-Demand capacity for variable workloads above baseline - Leverage Spot Instances for fault-tolerant processing tasks - Use Dedicated Hosts when licensing requirements dictate
Key Comparison Factors
Flexibility vs. Savings: - Spot: Highest savings, lowest reliability - On-Demand: Highest flexibility, no savings - Savings Plans: Balance of flexibility and savings - Reserved: Highest committed savings, least flexible
Commitment Duration: - Spot/On-Demand: None - Savings Plans/RIs: 1 or 3 years
Exam Tips: Answering Questions on Pricing Models Comparison
Tip 1: Match Workload Patterns to Pricing Models Steady, predictable workloads suggest RIs or Savings Plans. Variable or unpredictable workloads point to On-Demand. Interruptible batch jobs indicate Spot Instances.
Tip 2: Look for Cost Optimization Keywords When questions mention 'cost-effective,' 'minimize costs,' or 'optimize spending,' evaluate whether long-term commitments or Spot usage is appropriate.
Tip 3: Consider the Workload's Fault Tolerance If the scenario describes stateless applications, containerized workloads, or batch processing, Spot Instances are likely the answer. For critical databases or stateful applications, avoid Spot.
Tip 4: Understand Savings Plans vs. Reserved Instances Savings Plans offer more flexibility across instance types and services. Choose Convertible RIs when you need to change instance attributes. Standard RIs offer better discounts but are less flexible.
Tip 5: Remember Regional and Zonal Scope Standard RIs can be zonal (capacity reservation) or regional (flexibility). Understand when capacity reservation matters for the scenario.
Tip 6: Licensing Requirements Signal Dedicated Hosts When questions mention BYOL (Bring Your Own License), per-core licensing, or compliance requiring physical isolation, Dedicated Hosts are typically required.
Tip 7: Calculate Total Cost of Ownership For questions involving migrations or hybrid scenarios, consider all cost factors including data transfer, storage, and compute together.