AWS Saving Plan - Cost optimization tips

AWS Saving plan give you cost saving with AWS billing, but we need to be clear on key concepts how saving plan work and how it will impact on your bill. And similarly, when you are getting/purchasing saving plan, then what you need to keep in mind and how you should plan your saving plan purchase.

You can access aws saving plan page either from aws billing page left menu or from search box:

AWS saving plan offer for "EC2 Instance" option or "Compute" option or "SageMaker" option.

• EC2 Instance option : This you use generally for EC2 saving plan if you want to buy, this you use, if your aws account mostly using ec2 instances.
• Compute option : This you use when you have container services like ECS, ECR, Fargete instance or lambda etc..
• SageMaker option : This is specific to SageMaker service.

Let's understand, how saving plan work:

With saving plan, you need to commit per $ amount hourly you will be spending for at least 1 year. This also give you other tenure option like for 3 year. So if you commit to pay let say 1$ per hour for 1 year vs 1$ per hour for 3 year, means AWS will open more saving with 3 year.

Now question come, how I will be deciding how much amount I should commit, for that there are multiple ways:

1. You can refer recommendation which aws saving plan give you basis your current service utilization you have with aws account and purchase the recommended saving plan.

2. The recommendation you have seen above is basis the current load you have with AWS, but when you commit, it is actually at least for next 1 year so you need to be very careful, like the some of current services/ec2 could be just for test which you will be removing later or you will be adding few more services/ec2. So, generally what you should do it, you should look all the current load and then find at least those ec2 instances which you think I will run at least for 1 year and then basis that instance type, you can choose the pricing. So for this option you can use "purchase saving plan" option and there you need to choose your instance type and then provide the committed hour cost.

Now, with above screen, you may have question, let say, I have my ec2 instance type/family "c6a.large", then what should I put hourly commit cost and how should I know that cost. So for that, you can simply use saving plan calculator provided by AWS i.e.

Saving plan calculator link: https://aws.amazon.com/savingsplans/compute-pricing/

With above screen you can also see the comparison, how saving plan has less cost compare to on-demand cost.

Other info -

• While you purchasing saving plan, there also you find "payment option" and that give you option to pay no upfront or pay full upfront or partial. So, if you use no upfront, means you just buy this and you do not require to pay anything and as soon as your purchase is complete, from next month billing you must see the cost impact to have less billing.
• If you are using multiple instance type/family, then you can do multiple purchase and follow same steps/concept as above.

3. Other question you may have, let say you purchase by committing $0.03563/hour cost for "c6a" instance family and later you used added more ec2 instances of same family, that means your billing cost must increase, then here question is, how the above purchase will work with you billing?

So the answer is, saving plan will work to up to the cost you committed and you will get benefit around those cost only, any additional services/instance cost they will charge basis standard on-demand cost.

4. Next other question you may have, let say you purchase by committing $0.03563/hour cost for "c6a" instance family for 1 year and later you either terminated that instance or change instance type to any other or lower instance type like "t2". So because of this you will think/expect your cost should be decrease from next month billing, but no, that’s not correct.

So, when you commit/purchase the saving plan let say for 1 year, that means, that cost is fixed for 1 hear as hourly cost, does not matter you use that cost or not, but it will always add/calculate into the billing for 1 year till purchase plan is valid/opt for.

So, be very careful, to choose/decide hourly cost while purchasing saving plan and it always better to start with minimum commitment and instance which are 100% sure for next 1 year utilization.