EC2 Reserved Instance "Break Even" Points

Updated July 21, 2013 with the latest EC2 and RDS prices:

While trying to figure out the best deal for some EC2 instances we have running continuously (and inspired by Jordan Sissel's EC2 Reserved vs. On-Demand Chart), I charted the EC2 pricing curves for the various reserve options (light/medium/heavy utilization and 1- or 3-year terms). With reserve pricing, you're basically buying the right to run a specific instance type at a reduced hourly rate for a 1-year or 3-year term. For example, if you buy one "light-utilization" 1-year term for a small EC2 instance in your us-east-1a availability-zone, you pay $61 dollars now; and whenever you run at least one small instance in us-east-1a during the next 365 days, Amazon will automatically apply the reduced hourly rate to your usage for one of those instances (billing you at $0.034 an hour instead of $0.060 an hour for the instance).

Note that the "heavy" plans are a little bit different than the "light" and "medium" plans — Amazon will bill you each month for the full compliment of hours under the "heavy" plan, regardless of whether or not you actually use all the hours. In contrast, with the "light" and "medium" plans, Amazon will bill you only for the hours during which you had an applicable instance running. For example, if you've bought a "light" 1 year plan, and run an applicable instance for 100 hours in a 30-day month, Amazon will bill you $3.40 ($0.034 x 100 hours). But if you've bought a "heavy" 1 year plan, and run the same instance the same 100 hours, Amazon will bill you $10.08 ($0.014 x 24 hours x 30 days) instead.

Amazon's characterization of their reserve options as "light utilization", "medium utilization", and "heavy utilization" is also confusing, since you can use a "light utilization" plan heavily, and a "heavy utilization" plan lightly — you just have to think of the names as suggestions for how the plans might be most useful to you, rather than as restrictions on their use. And when you're using a number of instances of a certain type all the time, what really matters is how long you expect to continue to use that same number of instances in the future: one month, two months, a year, etc.

The Chart

So this is how I use the chart I made (although it shows the "small-instance" costs for the us-east-1 zone, all the EC2 reserve pricing follows the same basic curves): I figure out how likely we are to continue using an instance type (either in its current role, or in some future role) for which we're currently paying on-demand prices, try to put that likelihood into months (like "there's a good chance I'll still be using it in 2 months, and probably will be in 6 months, but I might not be in a year"), and then take a look at where those months fall on the chart:

The X axis is months, and the Y axis is dollars. Here's the legend:

Option Name	Term Years	$ Upfront	$ Hourly
On Demand	0	000.00	0.060
Light 1yr	1	061.00	0.034
Light 3yr	3	096.00	0.027
Medium 1yr	1	139.00	0.021
Medium 3yr	3	215.00	0.017
Heavy 1yr	1	169.00	0.014
Heavy 3yr	3	257.00	0.012

You can view the full chart separately (it's a javascript chart with fancy tooltips built using elycharts). The chart shows the cumulative cost after each month; for example, the first light-green dot shows that after one month of running a small instance 24/7, you'll have spent a total of $85.82 under the light-utilization 1-year term plan (from the upfront cost of $61, plus the hourly cost of $0.034 for one month). I modeled the "heavy" options as having a fixed price over their term — while technically their price isn't all upfront (Amazon bills you for the hourly component of those plans month-by-month), you'll eventually have to pay for all their hours, regardless of whether you use them or not (so your total cost is the same whether you use 1 hour or 10,000).

The Bottom Line

The chart shows that your best deal for an instance that you use 24/7 is "on demand" if you use it less than three months — but if you use it any longer, you would have been better off buying a "light utilization" plan. Here's a table of the best deal for a each length of time:

Months	Best Option
00 - 03	On Demand
03 - 07	Light 1yr
07 - 10	Light 3yr
10 - 12	Heavy 1yr
12 - 16	Light 3yr
16 - 29	Medium 3yr
29 - 36	Heavy 3yr

As an even rougher rule of thumb: less than half-a-year, "on demand"; half-a-year to a year-and-a-half, "light 3yr"; and over a year-and-a-half, "medium 3yr".

If you do actually use the heavy-utilization 3-year term plan for the full three years, it's a nice deal that can save you almost two thirds of what you'd pay for "on demand" over that time period (and not much more than what you'd pay a low-end VPS-hosting provider for a VPS with similar specs over the same time period) — but if you use it for less than half that time, you'll wish you had chosen any other option. Also, keep in mind that each reserved instance you buy is applicable only to a specific instance-type in a specific availability-zone — so if halfway through your term you stop using so many instances of that type, or move your usage of those instances to a different region, you'll be stuck with reserved instances you never use.

Other AWS Reserved Instances

I also included a chart for RDS instances on the same page as the full chart of EC2 instance pricing (below the EC2 chart). It looks quite similar to the EC2 chart, but if you look closely you'll see that the "break-even" points are slightly different: "light 3yr" becomes a better option than "on demand" around 3 months instead of 4, and as good as "light 1yr" in just 4 months; and "medium 3yr" becomes the best deal at just 14 months. I imagine the reserve options for other AWS services will be similar — same curves, slightly different deals.