There are several additional options available on Amazon EC2 to improve cost optimization, security, and performance that are important to your administration.
You are charged by instances for each hour that they are in a running state, but the amount you are charging per hour can vary based on three pricing options: on-demand instances, reserved instances, and point instances.
The hourly price for each instance type published on the AWS site represents the price of the On-Demand instances. This is the most flexible price option since it requires no initial commitment and the client controls when the instance is started and when it is closed. It is the least profitable of the three pricing options per hour of calculation, but its flexibility allows customers to save on provisioning a variable level of computing for unpredictable workloads.
The Reserved Instance price option allows customers to create capacity reserves for predictable workload. By using reserved instances for these workloads, customers can save up to 75% on the hourly rate on demand. When purchasing a reservation, the customer specifies the instance type and Availability Zone for this Reserved Instance and reaches a lower effective hour price for that instance during the reservation period. An added benefit is that the capacity in the AWS data centers is reserved for that customer. There are two factors that determine the cost of the reservation: the term commitment and the payment option. The term commitment is the duration of the reservation and can be from one to three years. The longer the commitment, the greater the discount.
There are three different payment options for reserved instances:
All Upfront-Pay: There is no monthly charge for the customer during the term.
Partial Upfront: Pay a part of the reserve charge in advance and the rest in monthly installments during the term.
No Upfront: Pay the entire reservation fee in monthly installments during the term term.
The amount of the discount is greater the more the customer pays in advance
AWS has reduced prices many times to date, so check the AWS website for up-to-date price information.
When your computing needs change, you can modify your reserved instances and continue to benefit from your capacity pool. The modification does not change the remaining term of your reserved instances; their final dates remain the same. There is no fee, and you do not receive any new bills or invoices. The modification is separate from the purchase and does not affect how you use, purchase or sell reserved instances. You can modify your entire reservation, or just a subset, in one or more of the following ways:
- Change the availability zones within the same region.
- Change between EC2-VPC and EC2-Classic.
- Change the instance type in the same instance family (Linux instances only).
Spot Instances (Spot)
For workloads that are non-critical and interrupt-tolerant, Spot Instances offer the highest discount. With Spot Instances, customers specify the price they are willing to pay for a particular instance type. When the customer’s offer price is above the current Spot price, the customer will receive the requested instance (s). These instances will function like all other instances of Amazon EC2, and the client will only pay the Spot price for the times the instance runs. Instances will be run until:
- The client ends with them.
- The price of the Spot exceeds the offer price of the customer.
- There is not enough capacity to meet the demand for Spot occurrences.
If Amazon EC2 needs to terminate a Spot Instance, the instance will receive a termination notification providing a two-minute warning before Amazon EC2 exits the instance.
Due to the possibility of interruption, Spot Instances should only be used for interrupt-tolerant workloads. This can include analysis, financial modeling, important data, media coding, scientific computing, and testing.