

Why Amazon Reserved Instances don’t make economic sense for startups - michaelkscott
http://www.jonathanboutelle.com/why-amazon-reserved-instances-dont-make-economic-sense-for-startups

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crb
This article is from 2009, and while many of the points it makes are still
valid, there is at least one that isn't:

> As a result, it ONLY makes sense to consider a dedicated instance for a
> machine that will be running 24 hours a day, 7 days a week.

Amazon have addressed this with their Light, Medium and Heavy RIs. The break-
even points on the cost savings are on this page:
<http://aws.amazon.com/ec2/reserved-instances/>

The one thing I would add about RIs is: they only apply to a pairing of AZ and
instance size. They suit people who scale out (adding more instances) and
don't suit people who scale up (changing their instance sizes and not using
the old reservations).

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moe
I'll extend and restate the obvious: EC2 doesn't make economic sense for most
startups.

EC2 shines for very small, very large or _very_ dynamic deployments (jitter of
at least +/- 20 servers).

Most startups outgrow "very small" (2-4 Servers) quickly and then stick around
in the mid-range (5-30 servers) for an eternity.

During this mid-range phase EC2 is usually 2x-3x more expensive than rented
dedicated servers.

~~~
ceejayoz
> During this mid-range phase EC2 is usually 2x-3x more expensive than rented
> dedicated servers.

That expense might be worth it, though, if your startup goes unexpectedly
viral and the site goes down for hours or days while you wait for your host to
provision new dedicated servers for you.

~~~
mceachen
But in this sort of timeframe, you'd be able to switch your DNS to point to
EC2 or heroku or whatever and scale out someplace else.

~~~
sandieman
What would you suggest instead?

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ubercore
One key part (mentioned by a comment in the story itself) that wasn't clear to
me at first is that you're not purchasing a single reserved instance. The
reservation applies to any instance of the type you've reserved. So regardless
of specific instances running 24/7, it can still make sense if you generally
have a specific instance flavor running all the time.

That makes it a lot more flexible, and a better value in a lot of cases, I
think.

~~~
nirvdrum
Just keep in mind that the reservation is also for a particular availability
zone. You need to stay within that zone to get the discounted rate.

~~~
ubercore
Was just checking my comments, and realized I recognized your username. WPI?

~~~
nirvdrum
Indeed. Sorry, don't recognize your username and your profile is a bit thin. I
graduated in '04 and '06.

~~~
ubercore
Lived in Stoddard (B I think?) freshman year.

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Isofarro
I went along to Amazon AWS Cloud for startups and developers
([http://aws.amazon.com/about-aws/AWS-cloud-for-startups-
devel...](http://aws.amazon.com/about-aws/AWS-cloud-for-startups-developers-
London/)) last week in London. One very interesting talk was
[http://www.slideshare.net/AmazonWebServices/optimizing-
your-...](http://www.slideshare.net/AmazonWebServices/optimizing-your-
infrastructure-costs-on-aws) \-- same slide deck, but different speaker in the
London event. If there's a video available of this talk, try to watch it.

On Reserved instances a one year Reserved instance is equivalent to 6 months
running a non-reserved instance. So it starts to save you money after 6
months. Don't remember if this was a High, Medium or Low usage reserved
instance. (slides 15, 16, 17)

Other cost savings techniques I found interesting:

* Using AWS ancillary services instead of building your own on EC2 servers saves a big chunk of cost (elastic load balancer, SQS, DynamoDB) -- slides 30-34

* Consider bidding for spot instances if you have data processing requirements that fit those usecases (Map/Reduce jobs for example). This will save you heaps. -- slides 21-30

* It's really all about fitting your usage graph to the right combination of EC2 instances, so something long-term to handle the average traffic. A medium resource to handle the daily peak loads, and something extra on hand to handle a short but sharp spike in traffic. And spot instances to push down the per hour resource cost in batch processing.

(Disclaimer, I work for LOVEFiLM, an Amazon company, but not involved in AWS
side of things)

~~~
sp332
It tells you right on this page exactly how much of a year you'd need to run
each instance type to break even on the reservation.
<https://aws.amazon.com/ec2/reserved-instances/>

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sauravc
Not only is this article is outdated, it makes broad sweeping generalizations
that make little sense for usage patterns that differ from the author's.

Reserved instances make perfect sense if your server on EC2 is running 24/7
for months on end. In fact, with now that Amazon has different rates for
medium/light/heavy utilization, it makes perfect sense for even more
situations.

We've taken advantage of RI's at my startup and the benefits are pretty clear.
Our app servers are micro instances running PHP, Python and Java (SOLR). We
scale by adding more instances not by renting bigger servers, so our RI's are
always in use. It's also worth noting that the reserved instances for RDS are
a great way to reduce costs as well (if you choose to use RDS).

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Isofarro
Site seems to be down. So Google cached version:
[http://webcache.googleusercontent.com/search?q=cache:67WG0Qe...](http://webcache.googleusercontent.com/search?q=cache:67WG0Qe1XLIJ:www.jonathanboutelle.com/why-
amazon-reserved-instances-dont-make-economic-sense-for-startups&strip=1)

