Selecting cost effective capacity reservations for your business-critical workloads on Amazon EC2

This blog post is written by Sarath Krishnan, Senior Solutions Architect and Navdeep Singh, Senior Customer Solutions Manager.

Amazon CTO Werner Vogels famously said, “everything fails all the time.” Designing your systems for failure is important for ensuring availability, scalability, fault tolerance and business continuity. Resilient systems scale with your business demand changes, prevent data loss, and allow for seamless recovery from failures. There are many strategies and architectural patterns to build resilient systems on AWS. Building resiliency often involves running duplicate workloads and maintaining backups and failover mechanisms. However, these additional resources may translate into higher costs. It is important to balance the cost of implementing resiliency measures against the potential cost of downtime and the associated risks to the organization.

In addition to the resilient architectural patterns, if your business-critical workloads are running on Amazon Elastic Compute Cloud (Amazon EC2) instances, it is imperative to understand different EC2 capacity reservation options available in AWS. Capacity reservations ensure that you always have access to Amazon EC2 capacity when you need it. For instance, Multi-AZ deployment is one of the architectural patterns to build highly resilient systems on AWS. In a Multi-AZ deployment, you spread your workload across multiple Availability Zones (AZs) with an Auto Scaling group. In an unlikely event of an AZ failure, the Auto Scaling group will try to bring up your instance in another AZ. In a rare scenario, the other AZ may not have the capacity at that time for your specific instance type, hence capacity reservations are important for your crucial workloads.

While implementing capacity reservations, it is important to understand how to control costs for your capacity reservations. In this post, we describe different EC2 capacity reservation and cost savings options available at AWS.

Amazon EC2 Purchase Options

Before we dive into the capacity reservation options, it is important to understand different EC2 instance purchase options available on AWS. EC2 On-Demand purchase option enables you to pay by the second for the instance you launch. Spot Instances purchase option allows you to request unused EC2 capacity for a steep discount. Savings Plans enable you to reduce cost through one- or three-year usage commitments.

Dedicated Hosts and Dedicated Instances allow you to run EC2 instances on single-tenant hardware. But only the On-Demand Capacity Reservations and zonal reservations can reserve capacity for your EC2 instances..

On-Demand Capacity Reservations Deep Dive

On-Demand Capacity Reservations enable you to reserve compute capacity for your Amazon EC2 instances in a specific AZ for any duration. On-Demand Capacity Reservations ensure On-Demand capacity allocation during capacity constraints without entering into a long-term commitment. With On-Demand Capacity Reservations, you pay on-demand price irrespective of your instance running or not. If your business needs capacity reservations only for a shorter duration, like a holiday season, or for a critical business event, such as large streaming event held once a quarter, On-Demand Capacity Reservations is the right fit for your needs. However, if you need capacity reservations for your business-critical workloads for a longer period consistently, we recommend combining On-Demand Capacity Reservations with Savings Plans to achieve capacity reservations and cost savings.

Savings Plans

Savings Plans is a flexible pricing model that can help you reduce your bill by up to 72% compared to On-Demand prices, in exchange for a one – or three-year hourly spend commitment. AWS offers three types of Savings Plans: Compute Savings Plans, EC2 Instance Savings Plans, and Amazon SageMaker Savings Plans.

With EC2 Instance Savings Plans, you can make an hourly spend commitment for instance family and region (e.g. M5 usage in N. Virginia) for one- or three-year terms. Savings are automatically applied to the instances launched in the selected instance family and region irrespective of size, tenancy and operating system. EC2 Instance Savings Plans also give you the flexibility to change your usage between instances within a family in that region. For example, you can move from c5.xlarge running Windows to c5.2xlarge running Linux and automatically benefit from the Savings Plans prices. EC2 Instance Savings Plans gets you the maximum discount of up to 72%.

Compute Savings Plans offer great flexibility as you can change the instance types, migrate workloads between regions, or move workloads to AWS Fargate or AWS Lambda and automatically continue to pay the discounted Savings Plans price. If you are an EC2 customer today, and planning to modernize your applications by leveraging AWS Fargate or AWS Lambda, evaluating Compute Savings Plans is recommended. This plan offers great flexibility so that your commercial agreements support your long-term changing architectural needs and offer cost savings of up to 66%. For example, with Compute Savings Plans, you can change from C4 to M5 instances, shift a workload from EU (Ireland) to EU (London), or move a workload from EC2 to Fargate or Lambda at any time and automatically continue to pay the Savings Plans price. Combining On-Demand Capacity Reservations with Compute Savings Plans give the capacity reservations, significant discounts and maximum flexibility.

We recommend utilizing Savings Plans for discounts due to its flexibility. However, some of the AWS customers might still have older Reserved Instances. If you have already purchased Reserved Instances and want to ensure capacity reservations, you can combine On-Demand Capacity Reservations with Reserved Instances to get the capacity reservations and the discounts. As your Reserved Instances expire, we recommend to sign up for Savings Plans as they offer the same savings as Reserved Instances, but with additional flexibility.

You may find Savings Plans pricing discount examples explained in the Savings Plans documentation.

Zonal Reservations

Zonal reservations offer reservation of capacity in a specific AZ. Zonal reservation requires one- or three- years commitment and reservation applies to a pre-defined instance family. Zonal reservation provides less flexibility as compared to Savings Plans. With zonal reservations, you do not have flexibility to change the instance family and its size. Zonal reservation also does not support queuing your purchase for a future date. We recommend to consider Savings Plans and On-Demand Capacity Reservations over zonal Reserved Instances so that you can get similar discounts and you get much better flexibility. If you are already on a zonal reservation, as your plan expires, we recommend you sign up for Savings Plans and On-Demand Capacity Reservations .

Working with Capacity Reservations and Savings Plans

You may provision capacity reservations using AWS console, Command Line Interface(CLI), and Application Programming Interface (API).

Work with capacity reservations documentation explains the steps to provision the On-Demand Capacity Reservations using AWS console and CLI in detail. You may find the steps to purchase the Savings Plans explained in the documentation.

Conclusion

In this post, we discussed different options for capacity reservations and cost control for your mission-critical workloads on EC2. For most flexibility and value, we recommend using On-Demand Capacity Reservations with Savings Plans. If you have a steady EC2 workloads which are not suitable candidates for modernization, EC2 Savings Plans is recommended. If you are looking for more flexibility of changing the instance types, migrate workloads between regions or planning to modernize your workloads leveraging AWS Fargate or AWS Lambda, consider Compute Savings Plans. Zonal reservations are not the preferred capacity reservation approach due to its lack of flexibility. If you need the capacity reservation for a short period of time, you may leverage the flexibility of On-Demand Capacity Reservations to book and cancel the reservations anytime.

You may refer to the blog to implement Reserving EC2 Capacity across Availability Zones by utilizing On Demand Capacity Reservations.