Reserved Instances and Savings Plans in AWS - Cheat Sheet & Quick Revision

Recall & Review

beginner

What is a Reserved Instance (RI) in AWS?

A Reserved Instance is a billing discount that you get when you commit to using a specific instance type in a region for a 1 or 3 year term. It helps save money compared to on-demand pricing.

intermediate

How do Savings Plans differ from Reserved Instances?

Savings Plans offer flexible pricing discounts based on your overall compute usage, not tied to specific instance types or regions, unlike Reserved Instances which are more specific.

intermediate

What are the two main types of Savings Plans?

The two main types are Compute Savings Plans, which apply to any EC2 usage regardless of region or instance family, and EC2 Instance Savings Plans, which apply to specific instance families in a region.

beginner

Why would a company choose Reserved Instances over On-Demand instances?

Because Reserved Instances provide a significant discount (up to 75%) when you commit to a long-term usage, helping reduce costs if your usage is predictable.

advanced

Can Reserved Instances be modified or exchanged?

Yes, Standard Reserved Instances can be exchanged for other Standard RIs of equal or greater value, and Convertible Reserved Instances can be exchanged for different instance types with different configurations.

What is the main benefit of purchasing a Reserved Instance?

A Free data transfer

B Access to more instance types

C Ability to pause instances

D Lower hourly cost by committing to long-term usage

Reserved Instances offer a lower hourly rate when you commit to using an instance for 1 or 3 years.

Which Savings Plan type offers the most flexibility across instance types and regions?

A EC2 Instance Savings Plan

B Standard Reserved Instance

C Compute Savings Plan

D Convertible Reserved Instance

Compute Savings Plans apply discounts across any EC2 instance regardless of region or family.

How long are typical commitment terms for Reserved Instances?

A 1 month or 6 months

B 1 year or 3 years

C 6 months or 2 years

D No commitment term

Reserved Instances require a 1 or 3 year commitment.

Which of the following is NOT true about Convertible Reserved Instances?

A They offer less flexibility than Standard RIs

B They require a long-term commitment

C They can be exchanged for different instance types

D They provide cost savings compared to On-Demand

Convertible RIs offer more flexibility than Standard RIs because they can be exchanged for different instance types.

Savings Plans discounts apply to which AWS service?

A Amazon EC2 compute usage

B Amazon S3 storage

C AWS Lambda executions

D Amazon RDS databases

Savings Plans provide discounts on Amazon EC2 compute usage.

Explain the difference between Reserved Instances and Savings Plans in AWS.

Think about commitment specificity and flexibility.

Describe when a company should consider using Reserved Instances.

Consider cost savings and usage patterns.

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