Reserved Instances and Savings Plans in AWS - Practice Problems & Coding Challenges

Challenge - 5 Problems

🧠 Conceptual

intermediate

Understanding Reserved Instances Billing

You purchase a Standard Reserved Instance (RI) for an EC2 instance with a 3-year term and All Upfront payment. After 1 year, you stop using the instance but keep the RI. What happens to your billing?

A You stop paying for the instance immediately since you stopped using it.

B You pay only for the months you used the instance, and the rest is refunded.

C You continue paying the full upfront cost for the entire 3 years regardless of usage.

D You pay a monthly fee until you cancel the RI.

💡 Hint

Think about how upfront payments work for Reserved Instances.

Standard Reserved Instances with All Upfront payment require you to pay the full cost at purchase. You keep the reservation for the full term regardless of usage, so you continue to own the RI and its billing benefits even if you stop using the instance.

❓ service_behavior

intermediate

Savings Plans Flexibility

You have a Compute Savings Plan for $10/hour. You run different instance types across regions. Which statement is true about how your Savings Plan applies?

A The Savings Plan applies only to the exact instance type and region you specified.

B The Savings Plan applies to any EC2 instance usage regardless of region or instance family.

C The Savings Plan applies only to instances in the same Availability Zone.

D The Savings Plan applies only to instances with the same operating system.

💡 Hint

Consider the flexibility of Compute Savings Plans compared to Standard RIs.

Compute Savings Plans provide the most flexibility and apply to any EC2 instance usage regardless of region, instance family, or operating system, as long as the usage matches the committed spend.

❓ Architecture

advanced

Optimizing Cost with Reserved Instances and Savings Plans

Your company runs a mix of steady-state and variable EC2 workloads across multiple regions. You want to minimize costs while maintaining flexibility. Which combination is best?

A Use On-Demand instances only to maintain maximum flexibility.

B Purchase Standard Reserved Instances for all workloads in all regions.

C Use Scheduled Reserved Instances for all workloads to save costs during peak hours.

D Use Convertible Reserved Instances for steady workloads and Compute Savings Plans for variable workloads.

💡 Hint

Think about balancing cost savings and flexibility for different workload types.

Convertible RIs allow changing instance attributes for steady workloads, while Compute Savings Plans provide flexibility for variable workloads across regions and instance types, optimizing cost and flexibility.

❓ security

advanced

Security Implications of Reserved Instances Sharing

Your AWS account is part of an organization with consolidated billing. How does Reserved Instance sharing affect security and billing visibility?

A Reserved Instances are shared and billing benefits apply across accounts, but usage details are visible only to the payer account.

B Reserved Instances are shared across all accounts, but billing details remain private per account.

C Reserved Instances cannot be shared across accounts in an organization.

D Reserved Instances sharing exposes all account credentials to the payer account.

💡 Hint

Consider how consolidated billing works in AWS Organizations.

Reserved Instances purchased by the payer account apply across linked accounts for billing benefits. Usage details are visible to the payer account, but account credentials remain secure and private.

✅ Best Practice

expert

Choosing Between Standard and Convertible Reserved Instances

Your team expects to change instance types and operating systems frequently over the next 3 years but wants to save costs. Which Reserved Instance type should you choose and why?

A Convertible Reserved Instances, because they allow exchanging for different instance types and OS during the term.

B Standard Reserved Instances, because they can be sold on the Reserved Instance Marketplace if needs change.

C Standard Reserved Instances, because they offer the highest discount and allow instance type changes.

D No Reserved Instances, only On-Demand, to maintain full flexibility.

💡 Hint

Think about flexibility in changing instance attributes over time.

Convertible Reserved Instances allow exchanging the RI for different instance types, OS, or tenancy during the term, providing flexibility with cost savings. Standard RIs do not allow such exchanges.

Practice

1. What is the main benefit of using AWS Reserved Instances or Savings Plans?

easy

A. They provide free support from AWS

B. They increase the speed of your instances

C. They reduce cloud costs by committing to usage over time

D. They automatically scale your instances

Solution

1. Step 1: Understand the purpose of Reserved Instances and Savings Plans

   Both are pricing models that offer discounts in exchange for a commitment to use AWS resources for a period.

2. Step 2: Identify the main benefit

   The main benefit is cost savings by committing to usage, not performance or support features.

3. Final Answer:

   They reduce cloud costs by committing to usage over time -> Option C

4. Quick Check:

   Cost savings = C [OK]

Hint: Focus on cost savings through commitment [OK]

Common Mistakes:

• Thinking Reserved Instances improve instance speed
• Confusing cost savings with free support
• Assuming automatic scaling is included

2. Which of the following is the correct way to describe a Savings Plan in AWS?

easy

A. A flexible pricing model that applies to compute usage regardless of instance type

B. A commitment to use a specific instance type in a specific region

C. A one-time payment for on-demand instances

D. A free trial period for new AWS users

Solution

1. Step 1: Recall Savings Plan characteristics

   Savings Plans offer flexible discounts that apply to compute usage regardless of instance type or region.

2. Step 2: Match the correct description

   A flexible pricing model that applies to compute usage regardless of instance type correctly describes Savings Plans as flexible pricing models, unlike Reserved Instances which are specific.

3. Final Answer:

   A flexible pricing model that applies to compute usage regardless of instance type -> Option A

4. Quick Check:

   Savings Plans = Flexible pricing = A [OK]

Hint: Savings Plans are flexible, not tied to instance type [OK]

Common Mistakes:

• Confusing Savings Plans with Reserved Instances
• Thinking Savings Plans are one-time payments
• Assuming Savings Plans are free trials

3. Given the following scenario: You purchase a 1-year Standard Reserved Instance for an m5.large instance in us-east-1. Later, you launch an m5.xlarge instance in the same region. How does the Reserved Instance discount apply?

medium

A. The discount applies partially, covering the m5.large portion of the m5.xlarge

B. The discount applies to any instance type in any region

C. The discount does not apply to the m5.xlarge instance

D. The discount applies fully to the m5.xlarge instance

Solution

1. Step 1: Understand Reserved Instance scope

   Standard Reserved Instances apply to specific instance types and regions. m5.large is different from m5.xlarge.

2. Step 2: Check discount application

   The discount partially applies because m5.xlarge is double the size of m5.large; the RI covers the equivalent of one m5.large unit.

3. Final Answer:

   The discount applies partially, covering the m5.large portion of the m5.xlarge -> Option A

4. Quick Check:

   RI discount partial for larger instance = D [OK]

Hint: RI discounts apply by instance size equivalence [OK]

Common Mistakes:

• Assuming full discount on different instance sizes
• Thinking discount applies across regions
• Believing discount applies to any instance type

4. You configured a Savings Plan but notice your billing does not reflect the expected discount. Which of the following is the most likely cause?

medium

A. You purchased a Reserved Instance instead of a Savings Plan

B. You purchased a Compute Savings Plan but launched instances outside supported services

C. You did not enable multi-region support in your Savings Plan

D. You launched instances only in the free tier

Solution

1. Step 1: Understand Savings Plan coverage

   Compute Savings Plans apply discounts to supported compute services like EC2, Fargate, and Lambda.

2. Step 2: Identify billing mismatch cause

   If instances run on unsupported services or outside the plan scope, discounts won't apply, causing billing to be higher than expected.

3. Final Answer:

   You purchased a Compute Savings Plan but launched instances outside supported services -> Option B

4. Quick Check:

   Discounts apply only to supported services = A [OK]

Hint: Check if instances use supported services for Savings Plans [OK]

Common Mistakes:

• Confusing Reserved Instances with Savings Plans
• Assuming multi-region must be enabled always
• Ignoring service eligibility for discounts

5. Your company has a steady workload running 10 m5.large instances in us-west-2 for 24/7 use. You want to minimize costs while keeping flexibility to change instance types later. Which option is best?

hard

A. Purchase 1-year Standard Reserved Instances for 10 m5.large instances

B. Use On-Demand instances only to keep flexibility

C. Purchase 3-year Convertible Reserved Instances for 10 m5.large instances

D. Purchase a 1-year Compute Savings Plan covering the equivalent usage

Solution

1. Step 1: Analyze workload and flexibility needs

   The workload is steady and predictable, so committing to usage saves money. Flexibility to change instance types is important.

2. Step 2: Compare options

   Standard RIs are less flexible; Convertible RIs allow changes but require longer commitment. Compute Savings Plans offer flexibility across instance types and families with 1-year commitment.

3. Step 3: Choose best option

   Compute Savings Plan balances cost savings and flexibility best for this scenario.

4. Final Answer:

   Purchase a 1-year Compute Savings Plan covering the equivalent usage -> Option D

5. Quick Check:

   Flexibility + cost savings = Compute Savings Plan = B [OK]

Hint: Choose Savings Plans for flexibility with steady workloads [OK]

Common Mistakes:

• Choosing Standard RIs despite flexibility needs
• Ignoring commitment length impact
• Assuming On-Demand is cheapest for steady workloads