EC2 pricing models (on-demand, reserved, spot) in AWS - Cheat Sheet & Quick Revision

Recall & Review

beginner

What is the On-Demand pricing model in EC2?

On-Demand pricing lets you pay for compute capacity by the hour or second with no long-term commitments. You can start and stop instances anytime and pay only for what you use.

beginner

Describe the Reserved Instances pricing model in EC2.

Reserved Instances let you reserve capacity for 1 or 3 years with a significant discount compared to On-Demand. You pay upfront or partially upfront and get a lower hourly rate.

beginner

What is the Spot Instances pricing model in EC2?

Spot Instances let you use spare EC2 capacity at steep discounts. However, AWS can reclaim these instances with a 2-minute warning if it needs the capacity back.

beginner

Which EC2 pricing model is best for flexible, short-term workloads?

On-Demand pricing is best for flexible, short-term workloads because you pay only for what you use without commitments.

intermediate

What is a key risk when using Spot Instances?

The key risk is that Spot Instances can be interrupted by AWS when the capacity is needed elsewhere, so they are not suitable for critical or long-running tasks without checkpointing.

Which EC2 pricing model requires a long-term commitment for a discount?

A Spot Instances

B On-Demand Instances

C Reserved Instances

D Dedicated Hosts

Reserved Instances require a 1 or 3 year commitment to get discounted pricing.

What happens to Spot Instances when AWS needs the capacity back?

A They are stopped immediately without warning

B They receive a 2-minute warning before termination

C They continue running without interruption

D They are converted to On-Demand Instances

Spot Instances get a 2-minute warning before AWS reclaims the capacity.

Which pricing model is best if you want to pay only for what you use with no upfront cost?

A On-Demand Instances

B Reserved Instances

C Spot Instances

D Savings Plans

On-Demand Instances let you pay only for what you use with no upfront cost.

Which EC2 pricing model offers the steepest discount but with interruption risk?

A Spot Instances

B Reserved Instances

C On-Demand Instances

D Dedicated Hosts

Spot Instances offer the biggest discounts but can be interrupted by AWS.

If you have a steady, predictable workload, which EC2 pricing model is most cost-effective?

A On-Demand Instances

B Dedicated Hosts

C Spot Instances

D Reserved Instances

Reserved Instances are best for steady workloads because they offer lower prices with a commitment.

Explain the differences between On-Demand, Reserved, and Spot EC2 pricing models.

Think about cost, commitment, and interruption risk.

When would you choose Spot Instances over On-Demand or Reserved Instances?

Consider workload tolerance for interruptions and budget.

Practice

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