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How Are the Discounts Structured?

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This is the second article in a series addressing the differences between and advantages of the AWS Reserved Instances and AWS Savings Plan models.

One of the key considerations is the structure of the discount model itself, which covers several important features. Bear in mind that these discount parameters can be relevant to specific resources or cover them all in general:

  • The instance type is a discount attribute that includes both the instance family (c6gn, for example) and the instance size (such as c6g.medium). It is useful to know that some discount arrangements support modifying the instance size as part of the instance family, while others allow you to change the instance family itself.
  • Payment terms describe the length of the time intervals the user commits to in terms of payment for using cloud resources. As a rule, the longer these intervals are, the better the discount deal will be. The terms usually cover intervals of one to three years. You can also get Reserved Instances for only one month if you wish.
  • Payment options refer to the payment terms the customer agrees to. One option is an upfront payment of the total amount for the full length of the time interval. This will give you an hourly rate of $0. The second option is a partial upfront payment which will give you access to a proportionate discount for the hourly rate. Finally, you can always go for the no upfront payment option which allows you to pay the discounted hourly rate for the duration of the term you picked.
  • A geographical zone can also have an impact on the discount applied, as it can refer to a specific availability area within a region. In other cases, the discount might apply to the resources that can be transferred between regions or to a specific availability zone only. As a rule of thumb, the fewer geographical limitations you get, the lesser the discount will be, so consider this carefully.
  • Finally, some of the platforms you want to use (Windows, Amazon Linux, etc.) offer fewer discount options than others. The same goes for instances running on dedicated or shared hardware hosts.

Additionally, remember that when considering the attributes linked to discounts, some of them can be modified after choosing a payment plan and some can’t. In general, higher discounts will be offered to the more specific i.e., the more limited attributes of those we’ve described above.