Figuring out when you should be buying reserved instances instead of using on-demand is a very important, yet challenging area which many would like to avoid. The majority prefer to stick with on-demand because there is no upfront fee and you pay as you go. However, this ends up being an extremely expensive option, but the alternative of buying reservations could be intimidating because of the upfront fee and the feeling liked you are locked in.
The actual reality is that more often than not it makes much more sense to go with the reserved instance for increased efficiency and lower costs, but figuring it out could be very complicated and time consuming.
It doesn’t have to be!
With Cloudyn, it is very simple to determine when it makes financial sense to switch from on-demand to reserved pricing with our EC2 RI comparison tool.
EC2 RI comparison
With our EC2 Reserved Instances Comparison tool, you are capable to view every single type of AWS instance, every virtual machine for every region, and for every platform and tenancy type, and determine which pricing model makes the most sense for each.
With the example below of H1.4xlarge, we receive a comparison of on-demand and reserved instance types in an easy to view graph.
On-demand is displayed with the blue line, showing no upfront costs, and a 12-month final cost of $26,784.
Looking at the light reservation (seen with the Red Line), we see the upfront payment of $2,576, yet when compared to on-demand, you realize a breakeven point is reached after only 2 months. In other words, after 2 months only, you begin savings with the light RI ongoing. If used for the remainder of the year, the total cost of light RI is $15,337 compared to $26,784 you would end up paying if used on-demand. That is a saving of over $10,000! And for one instance only.
The tool allows us to check the additional reservation types, and with medium reservation the upfront fee is $5,973, breakeven arriving after approximately 4 months, and a total 12-month cost of $13,827. This is even lower than the light reservation, but the difference between the two isn’t as significant. In such cases, we usually recommend light type, for there is a lower upfront fee, a quicker breakeven, and savings compared to on-demand are really significant overall.
It is important to note that each instance type consists of different pricing, so each should be viewed separately as to assess the proper direction for your business and needs. Still, with such potential savings coming from RIs, it is definitely worth the look. Another step in the right direction is the RI buying tool we provide.
Have a look for yourself with our free trial, and also check out our additional amazing tools to help with RI buying, check instances over time , and even cost allocation capabilities for showback and chargeback.