Reserved Instances (RIs) are a billing discount mechanism in AWS that provides significant cost savings compared to On-Demand pricing when you commit to using specific EC2 instance configurations for a 1-year or 3-year term. For Solutions Architects dealing with organizational complexity, understan…Reserved Instances (RIs) are a billing discount mechanism in AWS that provides significant cost savings compared to On-Demand pricing when you commit to using specific EC2 instance configurations for a 1-year or 3-year term. For Solutions Architects dealing with organizational complexity, understanding RIs is crucial for optimizing costs across multiple accounts and workloads.
There are three types of Reserved Instances: Standard RIs offer the highest discount (up to 72%) but have limited flexibility in modifying instance attributes. Convertible RIs provide lower discounts (up to 66%) but allow you to change instance families, operating systems, and tenancy during the term. Scheduled RIs let you reserve capacity for specific time windows.
In multi-account environments managed through AWS Organizations, Reserved Instances can be shared across accounts when consolidated billing is enabled. This capability allows organizations to maximize RI utilization by applying unused capacity from one account to matching instances in other linked accounts. The sharing feature operates automatically when RIs are purchased in the management account or member accounts with sharing enabled.
Key considerations for organizational design include: capacity reservations ensure instance availability in specific Availability Zones, scope options (Regional vs Zonal) affect flexibility and capacity guarantees, and payment options (All Upfront, Partial Upfront, No Upfront) impact the discount level received.
Solutions Architects should implement RI purchase strategies that align with organizational structure, considering factors like account segmentation, workload predictability, and growth projections. Using AWS Cost Explorer RI recommendations helps identify optimal purchasing decisions based on historical usage patterns.
For complex organizations, establishing governance policies around RI purchases prevents over-commitment and ensures cost benefits are realized across the enterprise. Combining RIs with Savings Plans and Spot Instances creates a comprehensive cost optimization strategy that balances savings with operational flexibility.
Reserved Instances - AWS Solutions Architect Professional Guide
Why Reserved Instances Are Important
Reserved Instances (RIs) are a critical cost optimization strategy in AWS that can reduce your EC2 costs by up to 72% compared to On-Demand pricing. For the Solutions Architect Professional exam, understanding RIs is essential because they appear in questions about cost optimization, organizational complexity, and multi-account strategies.
What Are Reserved Instances?
Reserved Instances are a billing discount applied to the use of On-Demand instances in your account. They are not physical instances but rather a commitment to pay for a certain amount of compute capacity over a 1-year or 3-year term. AWS offers three payment options:
• All Upfront - Pay everything at the beginning for maximum discount • Partial Upfront - Pay some upfront and the rest monthly • No Upfront - Pay nothing upfront, smaller discount with monthly payments
Types of Reserved Instances
Standard RIs: Provide the highest discount (up to 72%) but offer limited flexibility. You can modify the Availability Zone, scope, networking type, and instance size within the same instance family.
Convertible RIs: Provide a lower discount (up to 66%) but allow you to change instance family, operating system, tenancy, and payment option during the term.
How Reserved Instances Work
1. Capacity Reservation: Regional RIs do not guarantee capacity, while Zonal RIs reserve capacity in a specific Availability Zone.
2. Instance Size Flexibility: For Linux/Unix Regional RIs with default tenancy, the RI discount applies to any instance size in the instance family based on normalization factors.
3. Scope Options: • Regional: Applies to usage across all AZs in a region with instance size flexibility • Zonal: Applies to a specific AZ and reserves capacity
Reserved Instances in Multi-Account Organizations
When consolidated billing is enabled in AWS Organizations:
• RIs can be shared across all accounts in the organization • The RI discount applies to matching usage in any linked account • You can turn off RI sharing for specific accounts using the management account • RI utilization reports help track usage across the organization
RI Marketplace
You can sell unused Standard RIs on the RI Marketplace if your needs change. Convertible RIs cannot be sold on the marketplace.
Exam Tips: Answering Questions on Reserved Instances
1. Cost Optimization Questions: When a scenario asks for the most cost-effective solution for steady-state, predictable workloads, Reserved Instances are typically the answer over On-Demand or Spot.
2. Flexibility vs. Discount: If the question emphasizes changing requirements or uncertain instance types, choose Convertible RIs. If maximum savings is the priority with known requirements, choose Standard RIs.
3. Capacity Guarantee: When a question requires guaranteed capacity in a specific AZ, select Zonal RIs. Regional RIs do not provide capacity reservation.
4. Multi-Account Scenarios: Remember that RI benefits are shared across an AWS Organization by default. Questions about isolating costs may require disabling RI sharing.
5. Payment Options: All Upfront provides the maximum discount. If cash flow is mentioned as a concern, No Upfront or Partial Upfront may be appropriate.
6. Term Length: 3-year terms provide greater discounts than 1-year terms. Match the term to the workload stability mentioned in the question.
7. Instance Size Flexibility: Remember this only applies to Regional RIs for Linux/Unix with default tenancy. Windows and other platforms do not have this feature.
8. Savings Plans Alternative: Be aware that Compute Savings Plans offer similar discounts with more flexibility across EC2, Fargate, and Lambda. Questions may test your knowledge of when each is more appropriate.
Key Differentiators to Remember
• Standard RI: Higher discount, less flexible, can sell on marketplace • Convertible RI: Lower discount, more flexible, cannot sell on marketplace • Regional RI: Instance size flexibility, no capacity reservation • Zonal RI: No instance size flexibility, capacity reservation included