Why?

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 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.

Scheduled Instances

• One year term
• Repeating schedule (daily, weekly, monthly)
• http://docs.aws.amazon.com/AWSEC2/latest/UserGuide/ec2-scheduled-instances.html

Tenancy

• If you're using dedicated instances, choose Dedicated Tenancy
• If not, choose Default Tenancy

Usage

Instance Size Flexibility

• All Regional Linux/UNIX RIs with shared tenancy now apply to all sizes of instances within an instance family and AWS region, even if you are using them across multiple accounts via Consolidated Billing.
• RIs with Instance Size Flexibility use a concept of normalized units to apply billing credits.

• Let’s say you already own an RI for a c4.8xlarge (normalization factor of 64). This RI now applies to any usage of a Linux/UNIX C4 instance with shared tenancy in the region. This could be:

  • One c4.8xlarge instance.
  • Two c4.4xlarge (normalization factor of 32 each) instances (64 total).
  • Four c4.2xlarge (normalization factor of 16 each) instances (64 total).
  • Sixteen c4.large (normalization factor of 4 each) instances (64 total).
  • It also includes other combinations such as one c4.4xlarge and eight c4.large instances.
• If you own an RI that has a smaller normalization factor than the instance that you are running, you will be charged the pro-rated, On-Demand price for the excess.

• If you own an RI for a large instance and run a smaller instance, the RI price will apply to the smaller instance. However, the unused portion of the reservation will not accumulate.

  Instance size flexibility does not apply to Windows, Windows with SQL Standard, Windows with SQL Server Enterprise, Windows with SQL Server Web, RHEL, and SLES Reserved Instances.

Guaranteed Capacity

• If an Availability Zone is specified, EC2 reserves capacity matching the attributes of the RI. The capacity reservation of an RI is automatically utilized by running instances matching these attributes.
  

Payment Options

• 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

• NOTE with the recent announcement of 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.
• Reserved Instances are billed for every clock-hour during the term that you select, regardless of whether an instance is running or not.
• Reserved Instance billing benefits only apply to one instance-hour per clock-hour. (This needs to be confirmed for current applicability.)
• 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. (This needs to be confirmed for current applicability.)

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.
  

Reserved Instance Marketplace

• 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 the Cloud Team had 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)?
   1. No clock hour, only instance hour. Stopping and starting within an hour adds an hourly charge per start.
2. Additional clarification about instance hour vs. clock hour as they relate to billing.
   1. RI cannot apply to two instances simultaneously. Take away for additional research from AWS. Billed for every clock hour.
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?
   1. RI hour at top of clock hour, applied to first match. Reevaluated at top of clock hour. Need to research with billing team.
4. If the actual cost savings between 100% up front and 0% up front is ~5%, why bother with 100% up front?
   1. Dependent on cost of capital. At scale 5% can make a difference.
   2. No up front billing - someone else uses RI, account A still pays, account B gets it "free". Compute charge back numbers yourself.
   3. Blended rate - average price across all. (PDF - not correct due to RIs)
   4. Unblended rate - sum up for each account. Will show, "at this given hour what was hour rate".
5. Many of the RI benefits are Linux only. I'd like to see an actual table of what benefit applies to what OS.
   1. License baked in to SKU for instance hour on Windows and Red Hat. Pricing is not linear to resource.
6. Are the billing and usage rules the same for RDS RIs?
   1. AWS looking for more information. Will confirm with RDS team.
   2. No normalization factor weighting in RDS RIs.
   3. Single AZ deployment RI cannot be converted to multi AZ RI.
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?
   1. Zonal RI applied before regional RI to give best benefit to organization. Could result in an unused RI within an account.

General Recommendations

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