HomeOptimization & AllocationCost OptimizationAWS Cost Optimization with Reserved Instances

AWS Cost Optimization with Reserved Instances

If you own a business and are leveraging cloud computing, your business is bound to grow. But, so will your cloud computing bills. Amazon Web Services (AWS) offers a solution to the growing cloud computing bills; the concept of Reserved Instances (RIs). The whole concept of AWS cost optimization with RIs can be explained. Making a commitment to AWS to utilize specific instance type for a certain time period, you get good discounts on your cloud computing costs.

A reserved instance can be described as reserving resource and capacity for a particular time and a particular region within a certain availability zone. When you commit to paying for all the hours for a specific time period say 3 years, reserving an instance significantly lowers the hourly rate. AWS also ensures that the capacity is reserved for you in that particular availability zone.

RIs have often been a fearsome concern for many companies, especially those who don’t exactly know how to leverage this option. The companies that are looking for a reduction in their cloud bills must familiarize themselves with the advantages of RIs. They must know the proper tips and tricks to use this option to gain maximum advantage.


We will discuss some of the advantages that you and your company can gain by using Reserved Instances.

1. Money Saving:

One of the major reasons for using RIs are discounts, AWS offers for them. You can pay a lower upfront price instead of paying a higher on-demand price. This will decrease your cloud computing bill significantly. Using RIs correctly can save you up to 65% on your cloud bills.

2. Reserved Capacity:

The second major advantage of reserving an instance is that you can reserve capacity in your preferred availability zone. AWS divides its instances into different geographical areas that are often referred to as regions or zones. You can choose to have capacity reserved in any specific zone.

3. No chance of outage:

Many companies use reserved instances as cheap insurance policies by booking RIs in other availability zones. If due to any reason you face an outage of capacity in your region then, you have the option to shift your instances in another availability zone; provided that you already have reserved capacity there. Using RIs in this way can save you from a lot of trouble.

Tips and Tricks for AWS Cost Optimization:

It is true that there are risks involved in opting for Reserved Instances. But, these risks can be minimized if you know the proper way of using them. The following tips and tricks will ensure that you make a profit whenever you are dealing with reserved instances.

  • One of the best platforms that you can use to minimize the risk and increase the flexibility of your Reserved Instances is the AWS Reserved Instances Marketplace. Sell and purchase RIs in an effective, intelligent manner to make sure that you don’t suffer any losses.
  • If you go for the option of buying RIs with No Upfront, your risk is automatically minimized. You are not allowed to sell the RIs within 30 days of purchase in the marketplace though. However, you can sell them easily for $0 since there is no Upfront value on these RIs. And you won’t have to pay the 12% service fee for selling them.
Reserved Instances can save you big if planned carefully.
  • Another step you can take to minimize the risks is that you should prefer to modify your RIs instead of buying or selling them. The modification option eliminates the risk as you can easily change it back to the initial states in case you realize, you have made a mistake.
  • Since it is advertised that buying 3 year Upfront RIs will save you more, this is always not the case. Also, if you opt for this option, flexibility is decreased significantly. As AWS often reduces its rates, there is a large possibility that your locked-in rates will be higher than the rates offered at the latest.
  • Although Partial Upfront RIs offer lower rates than the No Upfront RIs, the risks involved in these are often high. The breakaway point of these RIs is further away so they often become very difficult to sell in the AWS Reserved Instance Marketplace.

To know how to purchase reserved instances, read here.

Share On


Please enter your comment!
Please enter your name here

Most Popular