HiFX

Optimizing Cost in AWS — Part 3

Yours is a slow/rapid growing organization, maybe with multiple AWS Accounts under an AWS Organization, you have no idea about the compute instance type you’ll be running, but be running anyway, you also have Lambdas and Far gates in your workload and you want to save some dollars for running these resources. Fear not — Savings Plan is a big umbrella for your needs.

Alright, so the Savings Plan is a big umbrella we purchase in an AWS Account to save some dollars for your computing needs — be it EC2 Instances, Lambda, Fargate or Sagemaker. If you have one AWS Account the purchase you make in that account is applicable only to the compute resources in the account, or if you have multiple AWS Accounts under an AWS Organization, you purchase the Savings Plan in the Payer account, which will cover all the compute resources running in the member accounts that are part of the AWS Organization.

We have three types of Savings Plan

  1. Compute — that covers EC2, Fargate and Lambda regardless of AWS Region, Instance Family/Type, and Operating System.
  2. EC2 Instance — you’re locked to a Region and Instance Family.
  3. SageMaker — only applies to SageMaker regardless of AWS Region, Instance Family/Component

Just like in Reserved Instances, we have the following Payment Mode:

  1. All Upfront – One-time fee, need not pay for the rest of the year.
  2. Partial Upfront – A small one-time fee, plus almost half on hourly price.
  3. No Upfront – No upfront fee, but a decent discount on hourly price.

Savings Plan type in AWS

How this works is based on the type of family (General Purpose/Compute optimized/Memory Optimized) of EC2 Instance you run in your account. Along with the EC2 Instances, the vCPU usage of Lambda and Fatgate tasks also comes into picture. You’d get a discounted rate for one year (5% — 49%) and more discount, if you opt for three years(17% — 63%). Following is the yearly calculation and savings of On-Demand vs one/three year Savings Plan for a Linux c6i.large EC2 Instance in Ohio region.

On-Demand — Standard Rate — 744.6

0.085 x 24 x 365 = 744.6

Savings Plan — One Year/No Upfront — Savings USD 206

0.06142 x 24 x 365 = 538.0392

Savings Plan — Three Years/No Upfront — Savings USD 385 per year

0.04101 x 24 x 365 x 3= 1078.5312 (359.5104 per year)

See the screenshots below to get more clarity on the discounted price. You may calculate your own from this page.

 Savings Plan calculation for Compute type for Three Years No Upfront payment mode.

Savings Plan calculation for Compute type for One Year No Upfront payment mode

You purchase a Savings Plan by committing an hourly price for the computed resources you’ll be running for the period of one year or three years. In most cases AWS does an excellent calculation by giving you an approximate recommendation of price per hour for your account level compute usage for the last seven days, last 30 days and last 60 days.

Savings Plan Recommendation

You can add the recommendation to the cart and purchase it right away or take it as a reference and increase or decrease the per hour rate and make a purchase manually

Manually purchasing a savings plan

Reserved Instances and Savings Plans are commitment you make to AWS for availing discounts and should be done ONLY after optimizing the application you’re running and the traffic it receives while serving the requests. Sometimes re-architecturing the application and adding new managed services could make drastic changes. We will talk about more on this in the next article, maybe with some examples that really worked.

Build Smarter Data Solutions on AWS

Curious About AWS Best Practices?

Our AWS consulting team brings years of enterprise cloud experience to help you architect, optimize, and secure your cloud infrastructure. Let’s explore the possibilities!

Leave a Comment

Your email address will not be published. Required fields are marked *

This will close in 0 seconds

Scroll to Top