Amazon is one of the largest and most popular cloud-based computing and storage service providers around the world. Amazon Web Services (AWS) offers an incredible range of advanced and efficient virtual servers and processors for optimal and valuable data processing and storage. The Amazon EC2 is one such excellent web service by Amazon.

Amazon EC2, short for Elastic Compute Cloud, is an internet-based service that offers a secure and flexible computing and storage facility for enterprise data. It makes web-scale cloud computing effortless for developers. The EC2 has an easy-to-use web interface that allows users to resize and redesign their computing needs according to the current requirement. Amazon EC2 is designed to provide users with complete control over computing resources and provides Amazon’s amazing computing environment for faster and more efficient development.

Amazon EC2 has a wide range of computing resources, storage space, processors, networking, purchase models and operating systems to offer, including the only 400 Gbps Ethernet network. The Amazon EC2 also packs an incredibly powerful GPU instance for machine learning training and processing graphics.

What are Amazon Reserved Instances (RIs)?

AWS offers its EC2 server solutions designed for different types of instances. Amazon allows users to select the level of networking capacity, storage, memory and CPU power they require to run their applications.

As compared to its On-Demand pricing model, the Amazon EC2 Reserved Instance (RI) offers a discount of up to 72%, apart from providing reservation capabilities when used in a particular Availability Zone.

Are there different types of EC2 Reserved Instances (RIs)?

Yes, there are basically three different types of reserved instances (RIs) offered by AWS EC2 services. You can make your choice for the best-suited RI according to your application requirements from the options given below:

  • Standard Reserved Instances (RIs) – Standard RIs are provided at the most reduced rates (as much as 72%) when purchased under an On-Demand payment model. These are ideal for steady-state use.
  • Convertible Reserved Instances (RIs) – Convertible RIs are offered at a lesser discounted rate (up to 54% under the On-Demand model) and provide the capacity to change the attributes of the RI. This is possible as long as it results in creating RIs of greater or equal value. These are also ideal for steady-state use.
  • Scheduled Reserved Instances (RIs) – Scheduled RIs are designed for launch within a specific reserved time period and are best suited to match your reservation capacity, especially with a predictable recurring schedule.

What are the benefits of Amazon Reserved Instances?

There are several reasons that make the Amazon EC2 RI a more popular and sought-after instance type among AWS users. The top two benefits that make the Amazon EC2 RI incredibly efficient are:

Discounted Rates

AWS RIs provide an extensive discount (as much as 72%) as compared to the Amazon On-Demand instance pricing model. In addition, it provides complete freedom for users to switch their instance families, tenancies and OS types. This is especially beneficial when you use Convertible RIs for RI pricing.

Reserve Capacity

RIs come with reserved capacity and thus provide extra efficiency and security for launching instances whenever required.

EC2 RIs are billed at a rebated hourly rate. In addition, they provide the option to reserve capacity for EC2 instances too. At the time of invoicing, the AWS Billing section automatically cuts down the rates to the discounted price when the properties of active RI and EC2 instance usage are similar.

Reserved Instance (RI) Payment Option

Amazon EC2 reserved instances are available for purchase over the AWS Management Console. You can choose from the following three payment options for reserved instances:

  1. No Upfront Reserved Instance – Under this payment model, there is no upfront payment needed. Users are billed at a reduced hourly rate for each hour within the plan term. This is regardless of the fact if the RI is being used or not. Users are under a contract to make monthly payments for the entire term of reservation, under the No Upfront Reserved Instance payment model. To buy the No Upfront Reserved Instance payment option, you will need to provide a successful billing history with AWS.
  2. Partial Upfront – In this payment plan, the user is required to pay a partial amount upfront while the remaining hours within the term plan are billed at a reduced hourly rate. The billing is done regardless of whether the Reserved Instance is used or not.
  3. All Upfront – Under this payment plan, the user is expected to make the complete payment for the full term at the beginning. However, under this plan, no additional hours and extra costs are billed, regardless of the total hours they are used.

No Upfront reserved instances are ideal for users who cannot determine or even estimate the number of computing hours required for the upcoming term.

See Also

AWS Billing and Cost Management


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.