EC2 pricing models (on-demand, reserved, spot) in AWS - Mini Project: Build & Apply

Understanding EC2 Pricing Models: On-Demand, Reserved, and Spot Instances

📖 Scenario: You are managing cloud resources for a small company. You want to understand how different EC2 pricing models work so you can choose the best option for your needs.

🎯 Goal: Create a simple AWS CloudFormation template that defines three EC2 instances, each using a different pricing model: On-Demand, Reserved, and Spot. This will help you see how to configure each pricing option in infrastructure as code.

📋 What You'll Learn

Define an EC2 instance with On-Demand pricing

Define an EC2 instance with Reserved pricing (using a Savings Plan or Reserved Instance equivalent)

Define an EC2 instance with Spot pricing

Use valid AWS CloudFormation syntax

Use clear and simple resource names

💡 Why This Matters

🌍 Real World

Cloud engineers often need to manage EC2 instances with different pricing models to optimize costs and availability.

💼 Career

Understanding how to configure EC2 pricing models in infrastructure as code is essential for cloud architects and DevOps engineers.

1

Create the base CloudFormation template with one On-Demand EC2 instance

Create a CloudFormation template with a resource named OnDemandInstance of type AWS::EC2::Instance. Set the InstanceType to t3.micro and use the AMI ID ami-0abcdef1234567890. This instance will use the default On-Demand pricing.

AWS

# Start your CloudFormation template here
# Define OnDemandInstance resource

Need a hint?

Use the Resources section to define your EC2 instance. The default pricing is On-Demand, so no extra config is needed.

2

Add a Reserved EC2 instance with a tag to indicate reservation

Add a new resource named ReservedInstance of type AWS::EC2::Instance. Use the same InstanceType and ImageId as the On-Demand instance. Add a tag with Key set to PricingModel and Value set to Reserved to indicate this instance is reserved.

AWS

Resources:
  OnDemandInstance:
    Type: AWS::EC2::Instance
    Properties:
      InstanceType: t3.micro
      ImageId: ami-0abcdef1234567890

# Add ReservedInstance resource below

Need a hint?

Tags help identify the instance type. Reserved pricing is managed outside CloudFormation, so tagging is a way to mark it.

3

Add a Spot EC2 instance with Spot options

Add a resource named SpotInstance of type AWS::EC2::Instance. Use the same InstanceType and ImageId. Under Properties, add a InstanceMarketOptions section with MarketType set to spot to specify this is a Spot instance.

AWS

Resources:
  OnDemandInstance:
    Type: AWS::EC2::Instance
    Properties:
      InstanceType: t3.micro
      ImageId: ami-0abcdef1234567890
  ReservedInstance:
    Type: AWS::EC2::Instance
    Properties:
      InstanceType: t3.micro
      ImageId: ami-0abcdef1234567890
      Tags:
        - Key: PricingModel
          Value: Reserved

# Add SpotInstance resource below

Need a hint?

Spot instances require the InstanceMarketOptions property with MarketType set to spot.

4

Add a Outputs section to show instance IDs

Add an Outputs section to the template. Create three outputs named OnDemandInstanceId, ReservedInstanceId, and SpotInstanceId. Each output should use Ref to return the instance ID of the corresponding resource.

AWS

Resources:
  OnDemandInstance:
    Type: AWS::EC2::Instance
    Properties:
      InstanceType: t3.micro
      ImageId: ami-0abcdef1234567890
  ReservedInstance:
    Type: AWS::EC2::Instance
    Properties:
      InstanceType: t3.micro
      ImageId: ami-0abcdef1234567890
      Tags:
        - Key: PricingModel
          Value: Reserved
  SpotInstance:
    Type: AWS::EC2::Instance
    Properties:
      InstanceType: t3.micro
      ImageId: ami-0abcdef1234567890
      InstanceMarketOptions:
        MarketType: spot

# Add Outputs section below

Need a hint?

Outputs help you see the instance IDs after deployment. Use !Ref to get the instance IDs.