
Amazon EC2 Pricing Changes Effective April 1, 2014 - tluthra
http://aws.amazon.com/ec2/pricing/effective-april-2014/
======
lamby
Something we should always remember when considering the implications and
hermeneutics of AWS pricing (from Brad Stone's book):

Bill Miller, the chief investment officer at Legg Mason Capital Management and
a major Amazon shareholder, asked Bezos at the time about the profitability
prospects for AWS. Bezos predicted they would be good over the long term but
said that he didn’t want to repeat “Steve Jobs’s mistake” of pricing the
iPhone in a way that was so fantastically profitable that the smartphone
market became a magnet for competition.

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applecore
This is huge. Startups everywhere are huge beneficiaries of this price war
between Amazon and Google over the future of cloud computing.

~~~
bane
Let's just hope they all stay in business so we don't end up with only one
player in the market...who can then jack up prices at will.

~~~
rodgerd
Welcome to Amazon's long-term business model.

~~~
joshjdr
In some respects it's Google's model too. They gave away Google Apps free to
small businesses for years as they pursued Microsoft's Exchange Server market.
At first Google Apps was free for up to 100 users, then 50, then 10. Now they
charge $5 per user per month for new plans. Legacy pricing is grandfathered so
they didn't really piss anybody off in the process, but it seems pretty clear
the strategy was to subsidize the product and accumulate market share.

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fragsworth
I just reserved a series of heavy-utilization m3.xlarge instances for roughly
$30k. Apparently, if I had waited a month, I could have saved about $13k
because of these price reductions.

I can't help but feel that I got really fucked by poor timing that I couldn't
control. It would hurt so much less if these price changes were more gradual
and somewhat consistent (perhaps monthly).

~~~
anderiv
It's worth calling and talking to your sales rep about this. I've found AWS to
be surprisingly accommodating with pricing.

~~~
iancarroll
I accidentally ran a spot instance for $70 an hour for two hours due to my
less-then-smart configuration. They refunded me.

:)

~~~
Deinos
That says a lot for their customer service. I know a lot of companies that
would have had more of a "you break it, you buy it" style attitude. Good on
them!

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logn
Wow the c3.8x large drops by almost a dollar/hr.

Cheers to Google.

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shebson
I would be so happy if Heroku passed along these price cuts to their
customers, but based on past AWS price cuts, I'm not holding my breath.

~~~
ROFISH
Heroku hasn't changed pricing since they launched, actually. The only
historical price reference I quickly found was that the EC2 was $0.085/hr for
(what is now called) an m1.small[1].

Heroku launched with $0.05/hr pricing.

Amazon's new m1.small pricing is $0.044/hr, nearly a 50% price drop over four
years.

Heroku still is $0.05/hr, the same price as when it launched. Heroku runs on
EC2.

[1] [http://www.sunsetlakesoftware.com/2010/09/15/how-run-
drupal-...](http://www.sunsetlakesoftware.com/2010/09/15/how-run-drupal-
amazon-ec2-using-new-micro-instance)

~~~
ufmace
Uh, did I miss something here? Sounds like Heroku was actually cheaper than
the raw EC2 rate when it launched, and is now just over half a cent per hour
more.

~~~
lylepstein
Heroku prices are per "dyno" which are significantly less powerful than an EC2
small.

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NathanKP
I see that the prices on the M3 instances dropped a bit more than the prices
on the M1 instances did, so they are encouraging us customers even more to
move from the older HHD based instances to the newer, faster SSD based
instances.

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mpg33
M1 is older hard drives and M3 is SSD? Didn't know that

~~~
clogston
Yeah, but keep in mind it's only applicable if you use instance-based storage
(which you declare when you spin up the instance). If you use an EBS mount
it's a moot point.

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redthrowaway
This is crazy. The savings we'll see from this alone are enough for another
full-time dev or two.

~~~
welder
How many instances do you run? At $17.52 saved per year for m1.small that
means you must be running over 10k instances to save enough for another full-
time dev or two... if your devs are located in SF area.

~~~
redthrowaway
We're currently spending about $20k/month on EC2 and are about to migrate a
bunch of our colos over. Between what we are spending and what we're budgeting
to spend with our new architecture, we're looking at a couple devs/year
savings (Victoria, BC)

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eliben
Competition is amazing. Cheers to free markets :)

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gtaylor
Let us hope that RDS prices also drop as a result of this. It's enough of a
value for us at the current price rates to be happy with it, but there will
need to be some decrease to make sure that it makes financial sense over
straight self-managed EC2.

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eropple
RDS prices dropping too.

[http://aws.amazon.com/rds/pricing/effective-
april-2014/](http://aws.amazon.com/rds/pricing/effective-april-2014/)

~~~
gtaylor
Thanks, good sir! This is exciting!

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rcthompson
Any time something is announced for April 1, I always have to take a minute to
figure out if it's a joke or not. If I wanted to make a change for my company
beginning in April, I think I would announce the planned date as April 2nd
just to avoid any confusion.

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lsaferite
Yeah, I have the exact same thing. I actually hate April 1st for this exact
reason. I try to stay off all forums even, just to avoid confusion.

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powera
The most striking thing to me is that they seem to be aggressively motivating
people to longer reservations. For RDS they only dropped prices for on-demand
(which is still expensive) and 3 year, heavy utilization instances.

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troels
Where do you see the new pricing for RDS?

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elbear
Here [http://aws.amazon.com/rds/pricing/effective-
april-2014/](http://aws.amazon.com/rds/pricing/effective-april-2014/)

~~~
troels
Thanks - This is fantastic news for us. A quick calculation says we'll save
about 30% on our next bill. RDS makes up a big chunk of that.

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j-rom
Just out of curiosity, why would one choose AWS over Digital Ocean? Isn't DO
considerably cheaper?

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seldo
DO's "internal" networking/security group support is still immature. I use DO
for personal stuff, but at work we use AWS.

Just never EBS. Ever.

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grosbisou
What's wrong with EBS? And for what usage?

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rpedela
Most of AWS's major outages have been related to EBS. Although outages can
happen to any hosting provider, and I am sure they have fixed the previous
issues. So EBS should get more stable over time and it is already quite
stable.

The performance of EBS is pretty bad, and getting decent performance is
expensive. Having said that, if your application runs in memory and disk usage
is infrequent then it is probably fine to use EBS. EBS is also much more
expensive than the instance storage, but it is also durable unlike instance
storage.

On the whole, "never ever EBS" is too strong language making it incorrect. As
usual, it depends.

~~~
mikebabineau
From what I've seen/heard/experienced, Provisioned IOPS largely addressed the
issues with inconsistent performance.

~~~
rpedela
Yes but it is very expensive.

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gtaylor
Just to make sure I'm reading this right, the upfront reservation fees are
higher, but the reserved hourly rates dropped a good bit. It's cheaper over
the duration of the reservation, but you owe more of the term upfront.

Given this tidbit, might you reserve an instance now, pay the lower fee, but
still take advantage of the new hourly rates on April 1? Or are you locked in
at whatever rate your reservation is for?

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nirvdrum
You're locked into whatever rate your reservation is for. This is why you see
rate fluctuations on the marketplace for the same instance type. It's also why
a 3 year reservation may not make sense.

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gtaylor
That makes sense, thanks for the clarification.

Bummer, though. We _just_ reserved a multi-AZ m3.large RDS instance last week.
I wish AWS would take up Google's system of graduated price reductions over
steady run duration.

~~~
nirvdrum
The other fun tidbit is on heavy reservations you pay per-hour even if you're
not using the machine. That's not the case for the light or medium. So keep
that in mind when planning out your reservations.

When we switched off EC2 it was financially advantageous to basically give
away our heavy instances on the marketplace just to shed the liability.

~~~
gtaylor
After this latest round of price cuts, I'm starting to question whether I even
want to reserve instances on the lower end. An m3.medium is about $52/month on
demand vs $35/month (amortized over 12 months with a 1-year heavy usage
reservation).

In this example, it becomes a question of whether it's worth saving $130'ish a
year for the liability that a 1-year m3.medium heavy util reservation
represents. At the lower end, that's not a huge amount of liability, but it
may be a case where I just don't bother reserving m3.mediums anymore because
it's a wash.

~~~
Aqua_Geek
Maybe my math is off, but I calculated $35/mo for medium utilization m3.medium
vs $32/mo for heavy utilization. In that case, I don't think a heavy
utilization reservation makes sense but a medium utilization reservation still
might (as you're saving ~$20/mo over on-demand).

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manishsharan
Dear AWS, could we also get a price drop on Cloudfront bandwidth ?

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carlosdp
That only took one day! This competition looks good for the future.

~~~
bsimpson
I wouldn't be surprised if this was Google-motivated, but since there was an
AWS summit today, it could have also been very coincident timing.

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jfoster
Amazon must've known the Google Cloud price reduction was coming.

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SeoxyS
Whoops, sounds like bitter (but still good) news for companies like ours that
have million-dollar contracts of reserved instances. If we were to grab our
reserved instances right now instead of a few months ago, we'd have saved more
than half a million over the next year. Bleh.

~~~
wmf
There are a bunch of calculators to compare reserved vs. on demand pricing,
but it just occurred to me that they should really be comparing reserved vs.
_predicted_ on demand pricing, taking into account inevitable future price
drops. Instead of locking in savings, reserved instances are really locking in
today's high prices.

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georgebarnett
The trouble I'm in is that I have to buy RIs for a particular workload to
ensure that the instances are there when I need them (and so I don't get
"Sorry, we're full" error).

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ausjke
DO still seems way cheaper for my usage though, but it's good to see Amazon
dropped prices.

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dalek2point3
Anyone have a sense of how long this price war could feasibly go on? What's
happening at the cost side for GOOG / AMZN? How much do you reckon its costs
the on the margin for extra cores, memory etc?

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diafygi
Hmm, the micro instances don't seem to have changed ($0.020/hr).

~~~
wise_young_man
I was just thinking that, the micro EC2 is now becoming more and more devalued
as the higher ones get closer to it's price per performance. I was hoping for
us to be able to spin up Beanstalk apps a little cheaper though and it is the
cheapest server option and $50/app vs Heroku is a bit expensive since it
requires the ELB. I wouldn't mind it all if they had a way to deploy multiple
apps using the EC2 servers and ELB you setup though.

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millioncents
I'm very impressed with Amazon's scale and their ability to produce such low
prices. Whilst many SaaS vendors (and even traditional brick and mortar
business) seemingly keep on increasing prices because of "inflationary"
pressures and whatnot... Amazon just keeps on showing - the consumers are
being taken for a ride by the rest of the businesses out there.

~~~
kaliblack
There's no relationship between Amazon's AWS pricing and pricing for goods and
services in other markets.

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WoodenChair
It's interesting how all of the focus of this discussion is Google, Amazon,
and Heroku. Why hasn't RedHat's OpenShift gained more mindshare? It's not a
bad platform, although I've found their support leaves something to be
desired. It's also priced very competitively for small apps (you get 3 nodes
free).

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chourobin
Does anyone know if these pricing changes are retroactive for customers that
have already purchased the reserved instances?

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noir_lord
Not usually.

It's pretty much Caveat emptor with them.

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ikarandeep
I'm hoping the storage price drops will in return let Dropbox lower its prices
to compete with Google Drive.

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warbaker
Thank you, Google.

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rmcpherson
Will there be any change to minimum spot instance pricing?

As far as I know this minimum is set by Amazon, but I don't see that pricing
listed in the announcement here.

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cauliturtle
ec2 pricing is just a small piece of the whole bill. but it is great to see
the price drops, thanks google!

wonder if there would be price battle on bandwidth.

~~~
iLoch
There seems to be price reductions everywhere (RDS, S3, etc.)

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CoconutPilot
We are in the middle of deracking and throwing out (no kidding) some 3+ year
old machines at my work. Care to take a guess at what a 3+ year old machine's
specs are? Cause I know you don't have a chance at getting it right.

Dell C1100 1U (almost 4 years old) 2x 6core with HT, 24 active threads 144 GB
RAM 10x 300 15k SAS

I think there are very few use cases where Amazon makes sense. Their VMs are
very expensive, and under powered for what you pay.

~~~
ghshephard
And yet, very rational people, with full understanding of the costs of both
environments, and pretty detailed spreadsheets (I've spoken with them)
continue to buy into PaaS/IaaS offerings aggressively.

For the most part, it's because the cost of hardware isn't the only factor,
but the flexibility, ability to rapidly scale (and descale), and, most
importantly, the fact that Amazon takes care of all the dirty network
engineering/system administration work required to keep the plumbing working.

But, hey, that's the great thing about the free market - every
company/individual gets to make the choices that are most advantageous for
themselves. I wouldn't be surprised that in regions where network
engineers/sysadmins make less than $125-$150K/year, and there isn't a need to
turn up a dozen servers overnight, (and, turn them off the night after that) -
that AWS/Azure/GCS isn't attractive. But, clearly, for others, it is.

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dagw
GPU instances for $0.65 an hour. Wow!

~~~
nivertech
It's the old price - no discount for g2 instances ;(

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dagw
It's been a while since I looked, but I recall GPU prices being around $2 and
hour (and thus writing them off).

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nivertech
$2 per hour are cluster compute instances with 2 NVIDIA Tesla M2050 GPUs
(“Fermi” GF100) GPUs. g2 instances are smaller with NVIDIA GRID GPUs (“Kepler”
GK104).

\- G2 popular use cases: Game streaming, 3D application streaming, and other
server-side graphics workloads.

\- CG1 popular use cases: Computational chemistry, rendering, financial
modeling, and engineering design.

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yixizhang
My reaction is Heroku should drop their price too.

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megaframe
Last time I priced this out for a personal project it was half the price just
to build something at home... if I didn't already own the setup this would be
pretty great.

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grinich
I love market competition. :)

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paaaaaaaaaa
Your move, Microsoft Azure.

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twistedpair
There went most of the rabbits out of Bezo's hat for re:Invent 2015.

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ing33k
how are they still making profits ?

~~~
PhantomGremlin
They're _not_ making profits. Most quarters they are only slightly profitable.
Current P/E is 582, which is astronomically high. E.g. for comparison Apple's
P/E is 13.

But that's been Amazon's strategy for almost two decades. Their goal is to
instead grow their business. Currently they are at $74 Billion / year in
revenue, and still increasing. Once they stop their massive spending on
growth, they will (presumably) be able to increase their profits.

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omarforgotpwd
"Effective April 1 2014, Google should go fuck itself" \-- Bezos

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chris_mahan
Remember, you get what (the reliability, service) you pay for.

And what happens when AWS is no longer a revenue source?

Shareholder (owner)'s decision: cut it.

~~~
dataminded
In my experience, unless you are paying for EC2 service in the form of a
support plan then there is no service to speak of.

Not a big deal if you are running a business but pretty significant
($588/year) if you are doing personal dev work.

