Amazon Web Services (AWS) provides Reserved Instance (RI) with an aim to cut back the cost of cloud computing and storage services without compromising on the immense scalability the Amazon EC2 RIs offer. As compared to the On-Demand pricing model, the Amazon EC2 Reserved Instances (RIs) billing discount is remarkable. The RI discount is provided when On-Demand Instances are used from an account. However, the On-Demand Instances should match specific properties, such as the same type of Instance and Region, so as to avail of the heavily reduced billing benefit.

What are the factors that decide AWS EC2 Reserved Instance pricing?

There are several diverse factors that determine the AWS EC2 Reserved Instances (RIs) pricing, such as:

1 – Properties of Instances

There are four instance properties that determine the price of Amazon EC2 Reserved Instances. These are:

Instance type – The instance family and instance size, for example, in m4.large, the instance family is m4 while the instance size is large.

Tenancy – If your instance operates on the default shared server or dedicated (single-tenant) server.

Region – The particular Region where the Reserved Instance (RI) is bought.

Platform – The type of operating system (OS) required for running applications, such as Windows, Linux, etc.

2 – Purchase plan

AWS offers EC2 Reserved Instance (RI) to users through two types of commitment plans – a 1-year plan and 3 years plan. Remember, the 3-years plan comes at a lower price in comparison.

1 Year Plan – AWS defines a year as 365 days (or 31536000 seconds)

3 Years Plan – AWS defines 3 years as 1,095 days (or 94608000 seconds)

Users need to make sure that they are aware of the expiry date of their subscription plan because AWS does not provide automatic renewal. Although your services will not be interrupted, in such as event, the Billing automatically starts charging at the On-Demand rates.

3 – Choice of payment

Users can choose to pay for the heavily discounted AWS EC2 RI rate through three different types of payment options. These are:

No Upfront – The bill is generated at a discounted hourly rate for every hour within the term plan, irrespective of whether the Reserve Instance (RI) is in use or not.

Partial Upfront – The user has to pay a part of the total plan cost at the time of purchase/renewal while the charges for the hours being used are billed at a reduced rate, whether the RI is being used or not.

All Upfront – The full payment for the entire term plan is required to be paid at the time of purchasing EC2 RI. No other additional charges and hourly costs are included within the term of the plan, irrespective of the hours the cloud server was used.

4 – Offering class

In case your computing requirements vary significantly, AWS also allows users to modify or replace the Reserved Instance (RI), depending on the offering class being selected, from:

Standard RI (Reserved Instance) – This offering class provides the largest discount, but can only be modified and cannot be replaced.

Convertible RI (Reserved Instance) – This offering class provides less discount than Standard RI, but can be easily replaced/exchanged for another Convertible RI with different instance properties and can also be modified according to requirements.

Is there a limit on buying Reserved Instances (RIs)?

AWS restricts the number of Reserved Instances that can be purchased in a month through a single account.

Amazon allows users to purchase 20 additional regional RIs in a particular Region and also offers an extra 20 zonal RIs every month, in each Availability Zone.

For example, a Region with 3 Availability Zones offers up to 80 Reserved Instances (RIs) per month (20 x 3 +20 = 80).

What are the benefits of buying AWS EC2 Reserved Instances (RIs)?

There are two main benefits that users can avail when they choose to buy AWS EC2 Reserved Instances:

Heavily discounted rate – AWS offers its EC2 RIs specifically to make its cloud-computing web-services more affordable and feasible for small enterprises and startups as investment capital is a rare commodity in such cases.

Immense scalability – Apart from the significant rate-cut, the AWS EC2 RIs are incredibly flexible and can grow and shrink according to your current computing needs.


The Amazon EC2 Reserved Instance (RI) is an incredible solution for small enterprises and startups to save investing in an in-house IT infrastructure. The impressive discount and immense flexibility is another great reason to buy AWS EC2 RIs now.

AWS reserved instance vs savings plan

AWS EC2 Covertible RIs


Steve is a product-marketer and Engineer at Cloudysave who works with Cloud Management and Adoption team. Over the past years, he has collaborated with multiple teams to provide a robust and cost-effective architecture patterns to influence business and engineering decisions. His key areas of interests include Cloud Costs Management, Security and DevOps Best-Practices.