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EC2 pricing models (on-demand, reserved, spot) in AWS - Time & Space Complexity

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Time Complexity: EC2 pricing models (on-demand, reserved, spot)
O(n)
Understanding Time Complexity

We want to understand how the cost and usage of EC2 instances grow when using different pricing models.

How does the number of instances and their usage affect the overall cost and resource allocation?

Scenario Under Consideration

Analyze the time complexity of launching EC2 instances with different pricing models.


# Launch EC2 instances with spot and on-demand pricing models; purchase Reserved Instance
aws ec2 run-instances --image-id ami-12345678 --count 1 --instance-type t3.micro --instance-market-options MarketType=spot
aws ec2 run-instances --image-id ami-12345678 --count 1 --instance-type t3.micro
aws ec2 purchase-reserved-instances-offering --reserved-instances-offering-id abcdef12-3456-7890-abcd-ef1234567890 --instance-count 1

This sequence launches one spot instance, one on-demand instance, and purchases one Reserved Instance.

Identify Repeating Operations

Look at the main actions that happen repeatedly when scaling instances.

  • Primary operation: Launching EC2 instances (run-instances API call)
  • How many times: Once per instance requested
  • Other operations: Purchasing reserved instances (one-time per reservation)
How Execution Grows With Input

When you increase the number of instances, the number of API calls to launch them grows directly with that number.

Input Size (n)Approx. API Calls/Operations
1010 run-instances calls + reserved purchases if any
100100 run-instances calls + reserved purchases if any
10001000 run-instances calls + reserved purchases if any

Pattern observation: The number of instance launches grows linearly with the number of instances requested.

Final Time Complexity

Time Complexity: O(n)

This means the effort to launch instances grows directly in proportion to how many you want to run.

Common Mistake

[X] Wrong: "Launching more spot instances costs less time and effort because they are cheaper."

[OK] Correct: The pricing affects cost, but the number of API calls and provisioning steps still grows with the number of instances regardless of pricing model.

Interview Connect

Understanding how resource requests scale helps you design systems that handle growth smoothly and predict costs clearly.

Self-Check

"What if we switched from on-demand to spot instances for all launches? How would the time complexity of launching instances change?"

Practice

(1/5)
1. Which EC2 pricing model allows you to pay only for the compute time you use without any long-term commitment?
easy
A. Dedicated hosts
B. Reserved instances
C. Spot instances
D. On-demand instances

Solution

  1. Step 1: Understand On-demand pricing

    On-demand instances let you pay per hour or second without any upfront commitment.

  2. Step 2: Compare with other models

    Reserved requires commitment; Spot can be interrupted; Dedicated hosts are physical servers.

  3. Final Answer:

    On-demand instances -> Option D

  4. Quick Check:

    Pay-as-you-go = On-demand [OK]
Hint: No commitment means On-demand pricing [OK]
Common Mistakes:
  • Confusing Reserved with On-demand
  • Thinking Spot is always available
  • Mixing Dedicated hosts with pricing models
2. Which of the following is the correct way to describe Spot instances in AWS EC2?
easy
A. Instances with a fixed monthly fee
B. Instances that use spare capacity and can be interrupted
C. Instances reserved for 3 years with upfront payment
D. Instances that run only on dedicated hardware

Solution

  1. Step 1: Define Spot instances

    Spot instances use spare AWS capacity and are cheaper but can be stopped anytime.

  2. Step 2: Eliminate other options

    Fixed monthly fee applies to Reserved; dedicated hardware is Dedicated hosts.

  3. Final Answer:

    Instances that use spare capacity and can be interrupted -> Option B

  4. Quick Check:

    Spot = spare capacity + interruption [OK]
Hint: Spot = cheap but can stop anytime [OK]
Common Mistakes:
  • Thinking Spot has fixed fees
  • Confusing Reserved with Spot
  • Mixing Dedicated hosts with Spot
3. You launch an EC2 instance using Spot pricing. What happens if AWS needs the capacity back?
medium
A. Your instance is stopped or terminated with a 2-minute warning
B. You are charged the full On-demand price instead
C. Your instance continues running without interruption
D. Your instance is automatically converted to Reserved pricing

Solution

  1. Step 1: Understand Spot instance interruptions

    AWS can reclaim Spot instances anytime, giving a 2-minute warning before stopping or terminating.

  2. Step 2: Check other options

    Instances do not continue uninterrupted; no automatic price change or conversion to Reserved.

  3. Final Answer:

    Your instance is stopped or terminated with a 2-minute warning -> Option A

  4. Quick Check:

    Spot interruption = 2-minute warning stop [OK]
Hint: Spot instances get 2-minute stop warning [OK]
Common Mistakes:
  • Assuming Spot instances never stop
  • Thinking Spot switches to On-demand automatically
  • Believing Spot instances run like Reserved
4. A user wants to save costs by committing to a 1-year usage but accidentally selects On-demand pricing. What is the main issue with this choice?
medium
A. On-demand pricing does not offer cost savings for long-term commitment
B. On-demand pricing requires upfront payment for 1 year
C. On-demand pricing instances cannot be launched immediately
D. On-demand pricing instances are always interrupted

Solution

  1. Step 1: Understand On-demand pricing characteristics

    On-demand pricing charges per use with no upfront or commitment discounts.

  2. Step 2: Identify the cost-saving option

    Reserved instances offer savings with 1 or 3 year commitments, unlike On-demand.

  3. Final Answer:

    On-demand pricing does not offer cost savings for long-term commitment -> Option A

  4. Quick Check:

    Commitment savings = Reserved, not On-demand [OK]
Hint: Commitment savings only with Reserved pricing [OK]
Common Mistakes:
  • Thinking On-demand requires upfront payment
  • Believing On-demand instances are delayed
  • Confusing interruption with Spot pricing
5. A company runs a critical web application that must be available 24/7 with predictable costs. They also want to reduce expenses by committing to usage. Which EC2 pricing model should they choose and why?
hard
A. Spot instances, because they are cheapest and can be interrupted
B. On-demand instances, because they have no commitment and flexible pricing
C. Reserved instances, because they offer cost savings with a commitment and stable availability
D. Dedicated hosts, because they provide physical isolation

Solution

  1. Step 1: Analyze availability and cost needs

    Critical 24/7 apps need stable availability and predictable costs.

  2. Step 2: Match pricing models to needs

    Reserved instances provide cost savings with 1 or 3 year commitment and stable availability; Spot can be interrupted; On-demand is flexible but more costly.

  3. Final Answer:

    Reserved instances, because they offer cost savings with a commitment and stable availability -> Option C

  4. Quick Check:

    Critical + savings + commitment = Reserved [OK]
Hint: Stable + savings + commitment = Reserved instances [OK]
Common Mistakes:
  • Choosing Spot for critical apps despite interruptions
  • Picking On-demand for cost savings
  • Confusing Dedicated hosts with pricing benefits