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Why?

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Types

Reserved Instances

• Standard Reserved Instances
  • Apply to a single instance family, platform, scope, and tenancy over a term
  • One or three year term
  • Can reserve capacity (locked into one availability zone, "zonal RI") or be regional (can launch in any AZ within the region, "regional RI")
  • Associated with one region for duration of term
  • Greatest discount

• Convertible Reserved Instances
  
  • They allow you to change the instance family and other parameters associated with a Reserved Instance at any time. For example, you can convert C3 RIs to C4 RIs to take advantage of a newer instance type, or convert C4 RIs to M4 RIs if your application turns out to need more memory.
  • Can exchange a portion of remaining CRI to a different family
  • Can merge two or more CRIs and obtain one for a larger instance
    • Merged CRIs will have the expiry date of the RI that is furthest from the date of exchange
    • Merging CRIs with different term lengths always produces a 3 year CRI
  • One or three Three year term
  • Can reserve capacity (locked into one availability zone) or be regional (can launch in any AZ within the region)
  • Associated with one region for duration of term
  • Slightly more expensive than Standard RI
  • Note : You cannot convert your Convertible Reserved Instance for Convertible Reserved Instance(s) of a lesser total value.

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• All up front
  • Biggest discount
  • Full payment is made at the start of the term, with no other costs incurred for the remainder of the term, regardless of hours used.
• Partial up front
  • A portion of the cost must be paid upfront and the remaining hours in the term are billed at a discounted hourly rate, regardless of usage.
• No up front
  • One year term
  Available with a 3 year term for C4, M4, R4, I3, P2, X1, and T2 Standard Reserved Instances only
  • You are billed a discounted hourly rate for every hour within the term, regardless of usage, and no upfront payment is required.

Billing

• With per-second billing for EC2 instances you can launch, use, and terminate multiple instances within an hour and get the Reserved Instance Benefit for all of the instances. This includes Windows Server, SQL Server, and open source Linux.
  • https://aws.amazon.com/about-aws/whats-new/2021/06/announcing-per-second-billing-for-ec2-windows-server-and-sql-server-instances/
• Reserved Instances are billed for every clock-hour during the term that you select, regardless of whether an instance is running or not.
  • https://docs.aws.amazon.com/AWSEC2/latest/UserGuide/concepts-reserved-instances-application.html
• Reserved Instance billing benefits only apply to one instance-hour per clock-hour.can be applied to a running instance on a per second basis.
• Rebooting an instance doesn't start a new instance billing period (with a minimum one-minute charge), unlike stopping and starting your instance. If A new instance-hour begins after an instance has run for 60 continuous minutes, or if an instance is stopped and then started . Rebooting an instance does not reset the running instance-hour.For example, if an instance is stopped and then started again during a clock-hour and continues running for two more clock-hours, the first instance-hour (before the restart) is charged at the discounted Reserved Instance rate. The next instance-hour (after restart) is charged at the On-Demand rate and the next two instance-hours are charged at the discounted Reserved Instance rate.again, you stop incurring charges for an instance as soon as its state changes to stopping. Each time an instance transitions from stopped to running, a new instance billing period is started, billing a minimum of one minute every time you start your instance.
  • https://docs.aws.amazon.com/AWSEC2/latest/UserGuide/ec2-instance-lifecycle.html#lifecycle-differences

Consolidated Billing

• You cannot control which instances are billed at the discounted rate
• If you leverage Consolidated Billing, AWS will use the aggregate total list price of active RIs across all of your consolidated accounts to determine which volume discount tier to apply.
  • Additional savings begin at $500k
  • Convertible RIs do not receive volume discounts however the value of each Convertible RI that you purchase contributes to your volume discount tier standing.
• Reserved Instances are first applied to usage within the purchasing account, followed by qualifying usage in any other account in the organization. The Reserved Instance discount is applied to qualifying usage that is detected first by the AWS billing system.
• In general, Reserved Instances that are owned by an account are applied first to usage in that account. However, if there are qualifying, unused zonal Reserved Instances in other accounts in the organization, they are applied to the account before regional Reserved Instances owned by the account.
  

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• The Reserved Instance Marketplace is an online marketplace that provides AWS customers the flexibility to sell their Amazon Elastic Compute Cloud (Amazon EC2) Reserved Instances to other businesses and organizations.

Questions for AWS

1. What are the possible situations where single instance running in an AWS account with a purchased RI (that matches) would ever be charged more than the RI hourly price? Multiple stops/starts within clock hour (or instance hour)?
2. Additional clarification about instance hour vs. clock hour as they relate to billing.
3. Assuming an RI is purchased in account A but the benefit is being used by account B. When account A turns on a qualifying instance, when does the RI benefit swing back?
4. If the actual cost savings between 100% up front and 0% up front is ~5%, why bother with 100% up front?
5. Many of the RI benefits are Linux only. I'd like to see an actual table of what benefit applies to what OS.
6. Are the billing and usage rules the same for RDS RIs?
7. The statement, "reserved Instances are first applied to usage within the purchasing account" seems to be contradicted by, "if there are qualifying, unused zonal Reserved Instances in other accounts in the organization, they are applied to the account before regional Reserved Instances owned by the account." Can you clarify?

General Recommendations

1. No up front cost purchase type
2. Regional
3. Standard RI (assuming your needs won't change that much)

Documentation

https://docs.aws.amazon.com/AWSEC2/latest/UserGuide/ec2-reserved-instances.html