AWS Savings Plans vs Reserved Instances: Which Should You Use?

Savings Plans and Reserved Instances both do the same basic thing. You promise AWS a level of usage for one or three years, and in return you get a discount of up to roughly 72 percent off on-demand rates. The question is which one fits your situation.

Reserved Instances in plain English

A Reserved Instance is a commitment tied to specific attributes, usually an instance family and region. Standard RIs give the deepest discount but are rigid. Convertible RIs let you change attributes later for a smaller discount.

The big advantage of RIs is coverage beyond EC2. If you run RDS, ElastiCache, Redshift or OpenSearch, RIs are how you commit to those. Savings Plans do not cover them.

Savings Plans in plain English

A Savings Plan is a commitment to a dollar amount of compute per hour rather than to a specific instance. There are two kinds:

• Compute Savings Plans are the most flexible. They apply across instance families, regions, and even to Fargate and Lambda. The discount is slightly lower, but they follow you as your architecture changes.
• EC2 Instance Savings Plans lock you to a family in a region for a higher discount, much like a Standard RI but a little easier to manage.

When each one wins

• Stable fleet that will not change much and you want the maximum discount: EC2 Instance Savings Plans or Standard RIs.
• Modern or changing architecture with containers and serverless: Compute Savings Plans, for the flexibility.
• You need to cover RDS, Redshift, ElastiCache or OpenSearch: Reserved Instances, because Savings Plans cannot.

How to avoid locking in waste

The most expensive mistake is buying commitments on top of an oversized fleet.

Right-size first, then commit. Otherwise you are locking in a discount on resources you should not be running at all.

Cover your steady-state baseline only, somewhere around 70 to 80 percent of your usage, and let the rest run on-demand so you stay flexible. Start with one-year terms before reaching for three-year, and re-check your coverage every quarter.

Want help sizing this for your account? Book a cost review and we will look at your real numbers together.