Savings Plan vs Reserved Instances

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Savings Plan vs Reserved Instances

AWS offers savings opportunities to fit most business cases. Savings Plans and Reserved Instances are the most well-known options to quickly reduce cloud bill without needing to make any changes to infrastructure.

Savings Plans are based on the commitment to spend a specific amount in dollars per hour over a definite period, while Reserved Instances are based on the commitment to use an instance at a certain price over a fixed time period.

What is AWS Savings Plan?

The AWS Savings Plan offers flexible low prices on EC2 instance usage irrespective of the size, AWS region, instance family and OS. Discounted price offers also apply to AWS Fargate and AWS Lambda usage. With AWS Savings Plan, actual instances are not bought but a commitment is made to on-demand instances at discounted prices for a period of 1 to 3 years.

There are three types of AWS Savings Plans:

  1. Compute Savings Plan: It provides the most flexibility and helps to reduce costs by up to 66%.
  2. EC2 Savings Plan: It provides the lowest prices, offering savings of up to 72% in exchange for a commitment to the usage of individual instance families in a region.
  3. SageMaker Savings Plans: It provides the most flexibility and helps reduce your costs by up to 64%

What are AWS Reserved Instances (RI)?

Reserved Instance (RI) is a billing discount that allows you to save on your Amazon EC2 usage costs. Reservation models are available for Amazon RDS, Amazon ElastiCache, OpenSearch Service, Amazon Redshift, and Amazon DynamoDB.

Reserved instances are reservations (long-term investments) where instances can be purchased and reserved in advance. There are various options to reserve these instances based on the term (1 or 3 years), and payment options (no upfront, partial upfront, or all upfront) enabling discounts against on-demand pricing with respect to committed utilization. With Reserved Instances, you can save up to 75% over equivalent on-demand capacity

RI Offering class:

Standard: These provide the most significant discount but can only be modified. Standard Reserved Instances can’t be exchanged.

Convertible: These provide a lower discount than Standard Reserved Instances but can be exchanged for another Convertible Reserved Instance with different instance attributes. Convertible Reserved Instances can also be modified.

Has Savings Plan replaced Reserved Instances?

AWS designed Savings Plans to be more flexible than RIs so as to overcome the risk of underutilizing AWS services but the fact is that Savings Plan is not meant to replace Reserved Instances. In fact, they both can be used at the same time since they serve different purposes, billing models, and use cases.

Our blog will help you understand their similarities, differences and in what scenarios each of them can be used.

How is the Savings plan similar to Reserved instances?

  1. Savings plans and RIs both are available in three payment options i.e. all up-front, partial up-front, and no up-front.
  2. Both are based on a commitment period.
  3. When usage exceeds commitment, AWS starts applying the regular On-Demand pricing.

Difference between AWS Savings Plans and Reserved Instances.

Savings Plans are based on the commitment to spend a particular amount per hour over a specific period whereas Reserved Instances are based on the commitment to use an instance at a particular price over a specific period when compared to on-demand cost.

Apart from this, there are various other factors that differentiate the two:

  1. Flexibility on Regions and usage types: Savings Plans allow you to make selection among multiple regions and usage types while Reserved instances are allocated to specific regions, instance types, operating systems, and tenants, which cannot be changed.
  2. Services and scope: There are various AWS services like Amazon EC2, AWS Fargate, and AWS Lambda supported by Savings Plan except for Amazon RDS whereas Reserved instances support services like Amazon EC2, Elastic Search, Relational Database Service (RDS), and RedShift except for Fargate (serverless applications).
  3. Reselling: AWS Marketplace does not allow you to sell or buy a Savings plan but Convertible RIs can be exchanged to enhance your commitment.
  4. Commitment to instance family: There is no need to commit to an individual instance family in a region for a Savings Plan but commitment to an individual instance family in a region is a must in Reserved Instances.

Use-cases where Savings Plans are best suited

  1. Ideal for systems undergoing usage changes since Savings Plans offer flexibility.
  2. Usage requirements are fluctuating significantly over the term or contract.
  3. Serverless use cases (AWS Fargate and Sagemaker applications).

Note: It is not suitable for short-term usage.

Use-cases where Reserved Instances are best suited

  1. Reservations are non-cancellable, so the instances should be used throughout the term or at least 75% of the time.
  2. Use cases that involve instances for databases (Amazon RDS) and compute (Amazon EC2).
  3. Consistency in usage for a term or period.

How CloudEnsure helps in saving up on cloud bills.

It is difficult to keep track of instances and determine if they are suitable for saving plans or reservations or both.

CloudEnsure makes it easier to manage cloud costs and spend with its recommendations on instances. The platform provides clear inputs and suggestions on whether they should be reserved or should opt for savings plan. Additionally, in-depth details such as the instance type that the user should buy based on their cloud usage pattern and the monthly possible savings are also recommended.


Depending on the use case scenarios and requirements, the need for purchasing RIs or Savings Plan can be determined by enterprises opting for AWS plans. AWS Savings Plan and AWS Reserved Instances are both unique in their own ways. Reserved Instances are based on the commitment to use an instance at a particular price over a specific period, while Savings Plans are based on the commitment to spend a particular dollar amount per hour over a specific period.

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