AWS Savings Plans

AWS Savings Plans - Complete Guide for AWS Solutions Architect Professional

Why AWS Savings Plans are Important

AWS Savings Plans are a critical cost optimization strategy that every Solutions Architect must understand. They can reduce AWS compute costs by up to 72% compared to On-Demand pricing. For organizations with predictable workloads, Savings Plans represent one of the most significant opportunities to optimize cloud spending while maintaining flexibility.

What are AWS Savings Plans?

AWS Savings Plans are a flexible pricing model that offers significant discounts on AWS usage in exchange for a commitment to a consistent amount of usage (measured in $/hour) for a 1 or 3-year term. Unlike Reserved Instances, Savings Plans provide more flexibility across instance families, sizes, operating systems, and regions.

There are three types of Savings Plans:

1. Compute Savings Plans
- Most flexible option
- Apply to EC2, Fargate, and Lambda usage
- Savings up to 66%
- Apply across any region, instance family, size, OS, or tenancy
- Automatically apply to any compute usage

2. EC2 Instance Savings Plans
- Apply to EC2 usage only
- Savings up to 72%
- Commitment to a specific instance family in a chosen region
- Flexible across sizes, OS, and tenancy within that family

3. SageMaker Savings Plans
- Apply to Amazon SageMaker usage
- Savings up to 64%
- Flexible across instance families, sizes, and regions

How AWS Savings Plans Work

Commitment Model:
- You commit to a consistent hourly spend (e.g., $10/hour)
- AWS applies the discounted rate to eligible usage up to your commitment
- Usage beyond your commitment is charged at On-Demand rates

Payment Options:
- All Upfront: Pay entire commitment upfront for maximum discount
- Partial Upfront: Pay portion upfront, rest monthly
- No Upfront: Pay nothing upfront, all monthly (smallest discount)

Term Length:
- 1-year term: Lower discount, less commitment risk
- 3-year term: Higher discount, longer commitment

Application Priority:
When you have multiple discount options, AWS applies them in this order:
1. Zonal Reserved Instances
2. Regional Reserved Instances
3. EC2 Instance Savings Plans
4. Compute Savings Plans
5. On-Demand pricing

Savings Plans vs Reserved Instances

Savings Plans Advantages:
- Greater flexibility across compute services
- Simpler management and understanding
- Automatic application to eligible usage
- Better for dynamic, evolving architectures

Reserved Instances Advantages:
- Capacity reservation option (Zonal RIs)
- Slightly higher discounts in some scenarios
- Marketplace for selling unused commitments

Exam Tips: Answering Questions on AWS Savings Plans

Key Scenarios to Recognize:

1. When Compute Savings Plans are the answer:
- Organization uses multiple compute services (EC2, Lambda, Fargate)
- Workloads may move between regions
- Instance families may change over time
- Maximum flexibility is required

2. When EC2 Instance Savings Plans are the answer:
- Predictable EC2 usage in specific regions
- Want higher discount than Compute Savings Plans
- Instance family is stable but sizes may vary

3. When Reserved Instances are still preferred:
- Need guaranteed capacity in a specific Availability Zone
- Want to sell unused capacity on the marketplace
- Specific legacy or compliance requirements

Common Exam Traps:

- Trap 1: Questions suggesting Reserved Instances are always better for cost savings. Remember that Savings Plans often provide comparable savings with greater flexibility.

- Trap 2: Confusing Compute Savings Plans with EC2 Instance Savings Plans. Compute Plans cover Lambda and Fargate; EC2 Instance Plans do not.

- Trap 3: Forgetting that Savings Plans do NOT provide capacity reservations. If capacity guarantee is mentioned, consider On-Demand Capacity Reservations or Zonal Reserved Instances.

- Trap 4: Questions about multi-account organizations. Savings Plans can be shared across accounts within an AWS Organization when consolidated billing is enabled.

Decision Framework for Exam Questions:

Ask yourself:
1. Is capacity reservation required? If yes, consider Reserved Instances or Capacity Reservations
2. Is the workload using multiple compute services? If yes, Compute Savings Plans
3. Is the workload EC2-only with predictable instance family? If yes, EC2 Instance Savings Plans
4. Is maximum discount the priority with stable workloads? If yes, consider 3-year All Upfront
5. Is flexibility the priority? If yes, Compute Savings Plans with No Upfront

Best Practices to Remember

- Use AWS Cost Explorer to analyze usage patterns before purchasing
- Start with Compute Savings Plans for maximum flexibility
- Layer Savings Plans with Reserved Instances for optimal coverage
- Enable Savings Plans sharing across AWS Organization accounts
- Monitor utilization through AWS Cost Explorer Savings Plans reports
- Consider purchasing incrementally rather than all at once