Velocity News

AWS Just Announced Its New Cost-Control Subscription Option

Over 10 years ago, Amazon Web Services (AWS) announced Reserved Instances (RIs). Their goal? To help customers see significant cost savings by committing to usage of a specific instance type and operating system with an AWS region. 

But, as AWS Chief Evangelist Jeff Barr recently pointed out, RIs have always been considered pretty complex. To fix that, AWS recently announced a new method: Savings Plans. 

“We are launching Savings Plans, a new and flexible discount model that provides you with the same discounts as RIs, in exchange for a commitment to use a specific amount (measured in dollars per hour) of compute power over a one or three year period,” Barr wrote in a blog post. 

At a high level, this means you no longer need to purchase RIs for a given instance type. Instead, you commit to a baseline level of spend per hour on compute that you’ll pay regardless of actual use. Anything at or below that usage level is included. And anything above it you’ll pay at the existing on-demand rates. 

Still have questions? We have answers. Here’s everything you need to know about the new AWS Savings Plans. 


How Do The New Savings Plans Work? 

  • Compute Savings Plans: This plan comes with a high level of flexibility. It isn’t tied to any specific region. That means you decide your spend commitment per hour across all of your accounts—and that’s it. You pay that set amount regardless of your usage, and any usage beyond your baseline commitment gets charged at normal on-demand rates. With this plan, you get up to a 66% discount for a three-year commitment, which applies not only to EC2 instances, but also to Fargate. This means you can seamlessly transition workloads between the two, and it’ll still apply to your spend commitment. 
  • EC2 Instance Savings Plans: This plan has less flexibility but provides you with deeper discounts. This is tied to a specific region and specific instance family, and in return, you get a varying discount percentage that comes in as high as 72% for a three-year commitment. 


So How Do You Purchase Savings Plans? 

You can get started with AWS Savings Plans directly from the AWS Cost Explorer management console. Here, you can get a better idea of what your costs and usage may look like in the future so that you can plan ahead.

Similar to RIs, Savings Plans have three payment options: 

  • No Upfront: This option doesn’t require any upfront payment and your commitment will be charged purely on a monthly basis. 
  • Partial Upfront: This option offers greater savings, but you will be charged at least half your commitment upfront and the remaining will be charged on a monthly basis. 
  • All Upfront: This option offers the highest savings. You’ll receive the lowest prices and your entire commitment will be charged in one payment. 


With the New Savings Plans, Are RIs Going Away? 

RIs aren’t going anywhere, meaning customers will have the option to choose between RIs and Savings Plans commitments. 


What Does This Mean If You Already Have Existing RIs? 

It’s important to note that you can’t convert existing RIs to the new Savings Plans model. You’ll have to wait for the RIs to expire or sell your RIs on the marketplace. However, if you want to get on board with the new Savings Plans today, your existing RIs will continue to work as-is alongside the new Savings Plans.   

Check out the full AWS announcement here! 

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