AWS Savings Plans and Amazon EC2 Reserved Instances (RIs) are the two main ways to commit to AWS compute spend in exchange for lower rates. Savings Plans “provide savings beyond On-Demand rates in exchange for a commitment of using a specified amount of compute power (measured per hour) for a one or three year period.”[1] Reserved Instances “are not physical instances, but rather a billing discount applied to the use of On-Demand Instances in your account” that match certain attributes.[4] Neither is a software license. They matter for software asset management because license-included software (Windows Server, SQL Server, RHEL) is priced inside the instance rate they discount, because AWS may pass vendor license price increases through to committed rates, and because the commitments outlast any change of licensing model. AWS itself now recommends “Savings Plans over Reserved Instances.”[4] For the general concept of committed consumption, see Subscription and consumption licensing.
Editions
Savings Plans types
AWS offers four types of Savings Plans:[2][3]
| Type | Maximum saving vs On-Demand | Scope |
|---|---|---|
| Compute Savings Plans | Up to 66% | EC2 regardless of instance family, size, Region, operating system or tenancy (including Dedicated Hosts), plus AWS Fargate and AWS Lambda |
| EC2 Instance Savings Plans | Up to 72% | One instance family in one Region, regardless of size, operating system and tenancy |
| Database Savings Plans | Up to 35% | Aurora, RDS, DynamoDB, ElastiCache, DocumentDB, Neptune, Keyspaces, Timestream, DMS and OpenSearch Service; one-year term, no upfront payment |
| SageMaker AI Savings Plans | Up to 64% | SageMaker AI instance usage regardless of family, size, Region and component |
The FAQ compares Compute Savings Plans to Convertible RIs and EC2 Instance Savings Plans to Standard RIs in the level of saving.[3] Savings Plans do not reserve capacity.[3]
Reserved Instance offering classes
A Reserved Instance’s price is set by four attributes: instance type, Region, tenancy and platform (operating system).[4] Two offering classes exist: a Standard RI “provides a more significant discount than a Convertible Reserved Instance, but you can’t exchange a Standard Reserved Instance”, while Convertible RIs can be exchanged for others with different instance family, type, platform, scope or tenancy; only Standard RIs can be bought or sold on the Reserved Instance Marketplace.[5]
Dedicated Host Reservations
Dedicated Hosts have their own reservation, available No Upfront, Partial Upfront or All Upfront for one or three years; each reservation covers hosts of one instance family in one Availability Zone.[8] See Amazon EC2 Dedicated Hosts and AWS License Manager.
Metrics
The Savings Plans unit is the Savings Plans hourly commitment: customers “make a commitment to a consistent usage amount, measured in USD per hour.”[4] Usage beyond the commitment is billed at On-Demand rates.[3] A Reserved Instance is a discount on matching instance-hours for a fixed configuration; a Dedicated Host Reservation discounts the Dedicated Host rate.[4][8]
Counting / floors
Terms and payment
Both constructs run for one year, defined as 365 days (31,536,000 seconds), or three years, 1,095 days (94,608,000 seconds).[1][4] Payment is All Upfront, Partial Upfront or No Upfront; for Reserved Instances, Partial and No Upfront hours are billed “regardless of whether the Reserved Instance is being used”, and No Upfront RIs require a successful billing history because they are “a contractual obligation to pay monthly for the entire term”.[4] Partial Upfront Savings Plans charge at least half of the commitment upfront.[3] The terms of a Savings Plan commitment “can’t be changed after purchase”.[2] Reserved Instances do not renew automatically; at expiry On-Demand rates apply.[4]
Sharing across accounts
By default, the Savings Plans benefit applies to usage across all accounts in an AWS Organization or consolidated billing family, and can be restricted or grouped with Cost Categories.[3]
What is not discounted
- Dedicated Instances carry a charge of $2 per hour in every Region with at least one running Dedicated Instance, and “These dedicated fees are not discounted by Savings Plans.”[2] See Dedicated Instances regional fee.
- A Reserved Instance bought for default tenancy “does not apply to a running instance with dedicated tenancy”, and tenancy cannot be changed by modification (only by exchanging a Convertible RI).[7]
- Savings Plans do not cover the u-6tb1 to u-24tb1 high-memory Dedicated Hosts.[8]
- Amazon EC2 High Availability for SQL Server, which waives SQL Server license-included fees on standby nodes, does not support Reserved Instances; AWS recommends Savings Plans so that both savings apply.[9]
- Per-user software fees such as License Manager user-based subscriptions are separate from the instance charges that RIs and Savings Plans can reduce.[10]
- AWS Marketplace software charges are separate from EC2 charges; changing an instance type moves the AMI license to hourly pricing while EC2 remains billed under the Savings Plan.[11]
Virtualization & partitioning
Savings Plans and Reserved Instances do not change tenancy or licensing rights. Compute and EC2 Instance Savings Plans apply to shared, Dedicated Instance and Dedicated Host tenancy alike, so a customer can “move from Dedicated tenancy to Default and continue to receive the discounted rate” under an EC2 Instance Savings Plan.[2] Whether the software on the instance may make that move depends on its own license: for example, Windows Server BYOL requires Dedicated Hosts (see AWS license-included and BYOL for Microsoft workloads).
Cloud / BYOL
License fee pass-through
The AWS Service Terms allow AWS to raise committed rates when an operating system vendor raises its license fee. If Microsoft increases Windows license fees or Red Hat increases RHEL license fees, AWS “may make a corresponding increase to the per-hour usage rate (or institute a corresponding per-hour usage rate) for Savings Plans for, or EC2 Reserved Instances with, Windows or RHEL.”[6] Windows increases are made “between December 1 and January 31” with 30 days’ notice, and RHEL increases with 30 days’ advance notice. An RI holder may then continue at the new rate, convert to comparable Linux RIs, or terminate the affected RIs for a pro rata refund of the upfront fee.[6] The catalog records this as the rule Windows and RHEL license fee pass-through.
Changing licensing model under a commitment
EC2 Instance and Compute Savings Plans apply regardless of operating system; AWS gives the example that a customer can change “the operating system (for example, from Windows to Linux)” and keep the discounted rate.[2] A Reserved Instance, by contrast, is priced for one platform; a Convertible RI can be exchanged for a different platform, while a Standard RI cannot be exchanged.[5]
Programs
Cancellation, refunds and transfer
Section 5.4.2 of the Service Terms governs all three commitment types. They are noncancellable, “so you will be charged for the duration of the term you selected, even if you terminate the Agreement”; amounts paid are nonrefundable, except that AWS refunds a pro rata share of upfront fees if it terminates the Agreement other than for cause or terminates the relevant program.[6] “Savings Plans and EC2 Dedicated Hosts are nontransferable”, while RIs are transferable only through the RI Marketplace; Convertible RIs are not eligible for it.[6] Customers are responsible for checking any fiscal or appropriation rules on upfront payments.[6] See the rule commitments are noncancellable and nonrefundable.
The one exception AWS publishes for Savings Plans is a return window: a plan with “an hourly commitment of $100 or less, purchased in the past 7 days and in the same calendar month can be returned”, with a full refund of upfront charges.[3]
Reserved Instance Marketplace
The rights to an active RI can be sold on the RI Marketplace only if more than one month of the term remains and the upfront charge has been paid and processed.[6] Customers may not buy RIs for the purpose of reselling them, and RIs bought through a discount program need AWS approval before resale.[6] Third-party sellers may offer RIs “at lower prices and shorter term lengths”.[4]
Out of scope
This article does not cover Savings Plans and RI rate tables by instance type and Region, zonal RI capacity reservations, On-Demand Capacity Reservations, EC2 Capacity Blocks for ML, private pricing agreements negotiated with AWS, or the accounting treatment of upfront payments.