AWS Made Easy
Close this search box.

Tip #38: AWS EC2 instances: different purchasing options

Choose the best EC2 instances purchasing option for your organization

There are seven different purchasing options for EC2 instances:

  • On-demand instances
  • Savings plans
  • Reserved instances
  • Spot instances
  • Dedicated hosts
  • Dedicated instances
  • Capacity reservations

Which one is the right one for your use case?

On-demand instances

This is the best starting point, especially if you don’t know much about your use case yet. You pay for the time the instance is running. Once you know more, you can check out the other available options.

Saving plans

If your company uses plenty of various EC2 instances, then this option might fit your bill. Saving plans allow you to save up to 72% on AWS compute workloads, regardless of instance family, type or region.

Reserved instances

With reserved instances you commit to 1-3 years to use an instance, regardless of this instance being used or not. If you want, you can opt for the convertible offering which allows you to exchange reservations with different instance attributes.

Spot instances

With Spot instances you can save up to 90% compared to on-demand pricing; the prices are set by AWS and adjust to long-term trends in supply and demand for Spot instance capacity. Where’s the catch? Spot instances are turned off with a two-minute interruption notice, so your application must be able to handle interruptions, and be able to start and stop automatically using scripts.

Dedicated hosts

A dedicated host is a physical server dedicated for your use. The prices range from ~$0.50 up to almost $70K per hour for on-demand dedicated hosts. You can cut costs with reservation pricing and saving plans.

Dedicated instances

Dedicated instances are EC2 instances running on hardware dedicated for your use. While the hardware is dedicated, you don’t have visibility of sockets, physical cores on the host as you would get with dedicated hosts. The prices range from $0.0052 up to over $54 per hour.

Capacity reservations

Capacity reservations are managed independently from billing discounts, and enable you to reserve compute capacity in a specific Availability Zone for any duration. There is no commitment period – when you no longer need it, just cancel the reservation to release the capacity and stop incurring charges.


All these EC2 instances purchasing options can be confusing at first, but it is crucial to understand them to keep your AWS bill under control. Monitor the cost usage metrics for your account, and set up your cost saving strategy accordingly.


AWS Made Easy


Leave a Reply

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

Related Tips & Tricks