

Ask HN: Can you explain Amazon EC2 Reserved Instances? - UnoriginalGuy

I am trying to price up running an instance for 12 months. Part of that is trying to understand their reserved instances and if savings can be made by buying them.<p>Unfortunately Amazon's pages are cryptic at the best of times and damn right nonsense in some cases (or maybe I'm just a moron).<p>So I have the following questions:<p>- If I get a 12 months reserved instance, do I need to buy a "on-demand" instance first? Are you reserving the on-demand instance or is a "reserve" instance a type of instance within its self?<p>- What the heck is the "Offering Type" (or RIs) and why would a Heavy cost LESS than a Light instance? Shouldn't it be the other way around?<p>Just to give you an example. Let's say we want a "medium" Linux instance for 12 months. 100% monthly utilisation.<p>If we do a single on-demand instance that is $117.12/month. But if we do a single reserved instance that is ONLY $23.42/month.<p>That seems "too good to be true" in terms of discount/savings (80% off). So I am guessing that isn't how Reserved Instances work.
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tgflynn
Have you read this page :

<http://aws.amazon.com/ec2/pricing/>

The first sentence under Reserved Instances is :

 _Reserved Instances give you the option to make a low, one-time payment for
each instance you want to reserve and in turn receive a significant discount
on the hourly charge for that instance._

In the table below you'll see that for each type of reserved instance there's
an Upfront column followed by an Hourly column. To get your total annual cost
for 100% utilization you would presumably add the 1 yr upfront cost to the
hourly rate multiplied by the number of hours in a year (8760). You'll find
that the total cost for a reserved instance is significantly less than that
for an on-demand instance (where the upfront cost is zero but the hourly rate
is higher).

