Comparing Savings Plans with AWS RI's Reserves

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Currently, the most common way to save money from your infrastructure on Amazon AWS, besides structuring an Cloud Center of Excellence is through Reserved Instances (RIs), let's talk today about AWS Savings Plans.

IR's were made for companies that already know that they will use large amounts of resources over a period of time, and in these cases, they can save some money by buying in advance.

This purchase can be for 1 or 3 years (upfront payment), but if you don't have good control over the use and especially, if you don't use it, you will lose them and all the money you spent.

Although Reserved Instances are not yet discontinued, it appears that AWS is trying to direct customers towards the new Savings Plans.

The AWS Chief Evangelist, Jeff Barr, describes Savings Plans as “a new, flexible discount model that provides the same discounts as Reserved Instances, in exchange for a commitment to use a specific amount (measured in dollars per hour) of computing power (compute capacity) over a period of time. of one or three years.”

Savings Plans come in two flavors: 

Compute Savings: Convertible Reserved Instance replacement automatically applies to any EC2 instance, including EMR, ECS or EKS clusters, and offers a discount of up to 66%. The thing you'll like best is that these are applicable across all AWS products, and you can even move workloads between regions and keep the same discount rate.

EC2 Instance Savings Plans: apply to families of specific instances of a region (instance types), providing up to 72% of discount, as instances of the Standard type. It allows you to select different sizes of the same instance type or even change operating systems from Windows to Linux without affecting your discount with your region of choice.

See how Savings Plans work:

The Savings Plans commitment is calculated by the hour and the discount will come on all use booked up to that limit; thereafter, they are billed at on-demand rates.

Here is a quick example to illustrate the above points:

You purchase an initial Savings Plan of US $ 10/hr for 1 year, ($ 10/hr * 24 * 365 = $ 87,600). If we assume that Savings Plans has a discount of 66%, with a commitment of US $ 10/hr we could use up to US $ 30 of on-demand usage per hour. Any usage above this will be billed at the on-demand price. For EC2 Instance Type Savings Plans, all expenditures within that household instance (M5, T3, etc) in the specified region will be discounted up to the hourly commitment. This allows customers to easily change the size of instances within the family and have the discounted rate.

Comparing AWS Savings Plans and Reservations:

While Saving Plans and reservations have a lot in common (both allow you to make an upfront monetary commitment in exchange for a discount) there are several key areas where they differ:

1.      Flexibility by regions: The first best news of this change! While bookings have become increasingly flexible over the years, one area where customers have never been able to make changes is in all regions. Computer Savings Plans offer this ability.

2.      I can use credits anywhere: Over the years, AWS has introduced features to make Reservations more flexible, culminating in convertible and size flexible reservations. But for customers it was necessary to take precautionary measures to ensure they were always getting the best discount. Savings Plans represent the most flexible and easy-to-use savings mechanism with hourly metering.

3.      Applicability to multiple services: The second best news! This is a subtle change, so it may have gone unnoticed, but it's the first time AWS has released a savings mechanism that applies across multiple services, in this case EC2 and Fargate.

4.      Purchasing by the hour instead of AWS reserved instances: Another subtle change, but one that requires a shift in mindset when you're shopping for Savings Plans compared to bookings. Savings Plans are purchased on a dollar-per-hour commitment, with the lowest possible commitment of US $ 8,760 per year (this equates to 1/10 of a cent an hour). Previously, reservations were purchased based on the cost of the instance.

Overview from AWS page

What are Savings Plans?

Savings Plans is a flexible pricing model that offers lower prices compared to On Demand prices, in exchange for a specific usage commitment (measured in USD/hour) for a period of one or three years. AWS offers three types of Savings Plans: Compute Savings Plans, EC2 Instance Savings Plans, and SageMaker Savings Plans. Compute Savings Plans apply to use on Amazon EC2, AWS Lambda, and AWS Fargate. EC2 Instance Savings Plans apply to use of EC2 while SageMaker Savings Plans apply to use of SageMaker.

What types of Savings Plans does AWS offer to reduce my bill?

AWS offers three types of Savings Plans:

  1. You Compute Savings Plans provide the most flexibility and help reduce your costs by up to 66%. These plans automatically apply to EC2 instance usage regardless of instance family, size, AZ, region, operating system, or instance location, and also apply to Fargate and Lambda usage. For example, with Compute Savings Plans, you can move from C4 to M5 instances, move a workload from EU region (Ireland) to EU region (London), or move a workload from EC2 to Fargate or Lambda at any time and automatically continue to pay the price of the Savings Plans.
  2. You EC2 Instance Savings Plans provide the lowest prices, offering savings of up to 72% in exchange for committing to use individual instance families in a region (eg, use of the M5 in N. Virginia). This automatically lowers your cost on the selected instance family in that region, regardless of AZ, size, OS or location. EC2 Instance Savings Plans provide the flexibility to change their usage between instances of a family in that region. For example, you can go from c5.xlarge running Windows to c5.2xlarge running Linux and automatically benefit from Savings Plan pricing.
  3. Amazon SageMaker Savings Plans is a flexible pricing model for Amazon SageMaker, in exchange for a commitment to a consistent amount of usage (measured in USD/hour) for a period of one to three years. Amazon SageMaker Savings Plans provide the most flexibility and help reduce your costs by up to 64%. These plans automatically apply to uses of eligible ML instances of SageMaker, including Notebook SageMaker Studio, Notebook On-Demand SageMaker Processing, SageMaker Data Wrangler, SageMaker Training, SageMaker Real-Time Inference, and SageMaker Batch Transform, regardless of family, size, or region of the instances. For example, you can change the usage of an ml.c5.xlarge CPU instance running in US East (Ohio) to an ml.Inf1 instance in US West (Oregon) for inference workloads at any time and automatically continue to pay the price of Savings Plans.

How to start using Savings Plans?

You can start with Savings Plans in the AWS Cost Explorer in the management console or using the API/CLI. You can easily commit to Savings Plans using the recommendations provided in AWS Cost Explorer, for the biggest savings. The recommended hourly commitment is based on historical On Demand usage and your choice of plan type, term length, and payment option. Once you enroll in a Savings Plan, your computing usage will automatically be billed at the discounted prices for Savings Plans, and any usage beyond your commitment will be billed at regular on-demand rates.

What payment options are available to pay for Savings Plans?

Savings Plans are available in three different payment options. The No Advance Payment option does not require advance payment, and your commitment will be billed on a monthly basis only. The Partial Advance Payment option offers lower prices on Savings Plans. With this option, you will be billed at least half of your appointment in advance, and the rest will be billed monthly. With the Full Upfront option, you will receive the lowest prices and your entire commitment will be billed in one payment.

Where do I see the discounted prices offered by Savings Plans?

Prices offered by Savings Plans are available on the pricing page here and can also be obtained using APIs/CLI. After signing up, you can view the prices offered for your active Savings Plans in the AWS Management Console or using the API/CLI.

How do Savings Plans work with AWS Organizations/Consolidated Billing?

Savings Plans can be purchased on any account within an AWS Organization/Consolidated Billing family. By default, the benefit provided by Savings Plans is applicable to use across all accounts in an AWS Organization/Consolidated Billing family. However, you can also choose to restrict the Savings Plans benefit to only the account that purchased them.

How do I find out how much my Savings Plans have helped me save?

The AWS Cost Explorer will show details about the savings achieved with the Savings Plans. You can also use the Savings Plans performance reports in AWS Cost Explorer to understand how well you are using your Savings Plans.

Can I have multiple Savings Plans active at the same time?

Yes. Your AWS invoice will be generated taking into account all active Savings Plans.

Compute and EC2 Instances Savings Plans

How do Savings Plans compare to EC2 RIs?

Savings Plans offer significant savings over On Demand, just like EC2 RIs, but automatically reduce your bills for compute usage in any AWS region, even if usage changes. This gives you the flexibility to use the computing option that best suits your needs and continue to save money, all without having to make changes or modifications.

Compute Savings Plans, which offer savings of up to 66% (like convertible RIs), automatically lower your cost on any EC2 instance usage, regardless of region, instance family, size, operating system, location, and even AWS Fargate or from AWS Lambda. EC2 Instance Savings Plans, which offer savings of up to 72% (like Standard RIs), automatically save you money on any instance usage within a given EC2 instance family in a chosen region (eg M5 in Northern Virginia ), regardless of size, operating system, or location.

Do Savings Plans provide capacity reservations for EC2 instances?

No, Savings Plans do not provide a capacity reserve. However, you can reserve capacity with Capacity reserves on demand and pay lower prices with Savings Plans.

Can I continue to buy EC2 RIs?

Yes. You can continue to purchase RIs to maintain compatibility with your existing cost management processes, and your RIs will work in conjunction with Savings Plans to reduce your overall bill. However, as your RIs expire, we recommend that you enroll in Savings Plans as they offer the same savings as RIs, but with additional flexibility.

Amazon SageMaker Savings Plans

Why should I use Amazon SageMaker Savings Plans?

If you have a consistent amount of Amazon SageMaker instance usage (measured in USD/hour) and you use multiple SageMaker components, or expect your technology configuration (eg instance family, region) to change over time, SageMaker Savings Plans make it simple to maximize your savings while providing the flexibility to change the underlying technology configuration based on application needs or new innovations. The Savings Plans fee automatically applies to all use of qualifying ML instances with no manual modifications required.

How are Savings Plans for Amazon SageMaker different from Compute Savings Plans for EC2?

The difference between Savings Plans for Amazon SageMaker and Savings Plans for EC2 is in the services they include. SageMaker Savings Plans only apply to the use of ML instances of SageMaker.

So here's our recommendation:

You need to be careful before committing to a Savings Plan, make sure the historical usage it is based on is realistic. If you have recently disabled some services or you know there are plans to do so, you may be able to pay more per hour than you need to.

we are the 4Matt Technology, experts in Software Governance and CCoE, Cloud Center of Excellence.

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