EC2 provides different purchase options to allow best cost efficiency based on your needs.
- On-Demand Instances Full price, no commitment.
- Reserved Instances Greater discount on longer commitment.
- Saving Plans Pay a certain amount per hour.
- Spot Instances Use spare EC2 capacity at a very hourly low price, but taking a risk of losing instances at any time.
- Dedicated Hosts Book an entire server with full EC2 capacity on it.
- Dedicated Instances Book a physically isolated instance on a sever.
- Capacity Reservation Book instances at full price, bill is charged even when instances are not running.
On-Demand Instances
Pay by the time for instances you launched. It has no upfront payment, and no long-term commitment. Suitable for applications with short-term, irregular workloads that cannot be interrupted.
- Linux or Windows Billing per second, after the first minute.
- All other operating systems Billing per hour, commit to a 1 or 3 years usage. Locked to a specific instance family and AWS region.
Reserved Instances
You reserve a specific instance that matches specific attributes (i.e. instance type, region, tenancy, OS). Reserved instances provide you with significant saving compared to on-demand instance pricing. You can buy and sell your reserved instances in the Reserved Instance Marketplace.
You can reserve instances over a 1 year or 3 years period, with more price benefit on the latter; and you are given flexible payment options: No upfront (+price benefit), partial upfront (++price benefit), all upfront (+++price benefit).
Convertible Reserved Instance
You can choose the Convertible Reserved Instance plan with less price benefit if you need the flexibility to change the EC2 instance type, instance family, OS, scope and tenancy.
Saving Plans
Get a discount based on long-term usage, billed every hour. You have to commit to 1 or 3 years of usage, any usage beyond the Saving Plans is billed at the on-demand price. You will be locked to a specific instance family and AWS region, but you have the flexibility across instance size, OS, and tenancy.
Spot Instance
Use spare EC2 capacity that is available for less than the on-demand pricing, but you are taking a risk of losing instances when the demand is high. Spot Instance offers the highest discount across all purchase options. They are useful for workloads that are resilient to failure.
- Batch jobs
- Data analysis
- Image processing
- Any distributed workloads
It is not suitable for critical jobs or databases.
Dedicated Hosts
Book an entire physical sever with full capacity of EC2 instance on that sever. It allows you to address organisation’s regulatory or compliance requirements and use your existing server-bound software licences. (per-socket, per-core, pe-VM software licences). You can choose from on-demand or reserved purchase options.
Dedicated Instances
Instead of shared tenancy hardware, your EC2 instances are running on a hardware isolated environment that is dedicated for you, you may share hardware with other instances in the same account.
Capacity Reservation
Reserve on-demand instances in a specific Availability Zone (AZ) for any duration. You are charged at on-demand rate whenever your instances are running or not. Capacity Reservation is suitable for short-term, uninterrupted workloads that needs to be in a specific AZ.
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Reference - Instance purchasing options - Udemy instance purchasing options