How To Plan an EC2 RI Purchase in 6 Steps

Do Reserved Instances make you anxious? They shouldn't. 

A lot of people get caught up in all the different possible reservations you can purchase and wait months before making their first purchase.

Don't do that.

Below is all you need to start saving money and take advantage of Amazon's capacity guarantee today. 

Step 1: Arrange Your Instances by Their Purpose

How do you group your infrastructure? By project, environment or application? Great. Put them all together and separate by OS and move on to step 2. If you mix Windows and Linux instances, it will complicate the entire process because of licensing and pricing differences. 

Step 2: Figure Out the Cost

Once you've organized your instances into groups by their purpose, figure out what your current on-demand costs are and arrange your groups in descending order.

Step 3: Find Out Who Makes the Cut

Eliminate any groups or instances that won't be running more than 65% of the time. Also eliminate any that you don't expect to be running 1 year from now.

Step 4: Figure Out Where Your Reservations Will Reside

Once you've figured out the region (e.g. us-east-1 or us-west-1), you'll need to specifically choose the availability zone where you currently have the most on-demand usage (e.g. 1a or 1b).

You'll also have to choose whether they will reside within a VPC or in classic EC2 mode. For most newer customers your infrastructure will most likely already be in a VPC. 

Step 5: Decide How Much You're Going to Give AWS Upfront

Sometimes the increased savings you reap from all upfront reservations are not enough to justify their initial upfront fee. The table below shows how purchasing an all upfront m3.large reservation will cost $308 ($751-$443) more and only offer 2% more in monthly savings. Obviously the number of reservations will affect the dollar amount savings, so make sure to do the math regardless.

Step 6: Determine the Purchasing Account

Do you have more than one account linked to a consolidated bill?

You should:

a)   Purchase in the consolidated account if you don't care about the capacity reservation. This option simplifies the purchase and management of reservations, but you're not guaranteed to be able to launch an instance based on a reservation in a linked account if the reservation was made in another account.

b)    Purchase in the linked accounts if you want to receive the cost and capacity reservation of the RI, although the planning process will be significantly more complex. Note: Other accounts can still benefit from the associated discount if a valid instance isn’t running in the purchasing account.

Based on experience, the best advice I can give is to purchase reservations on an account-by-account basis.

Don't want to spend all this time to model out your purchase? I don't blame you. I used to do it before we released the RI Optimizer. Have it plan your most cost-optimal purchase in seconds.