A short guide to AWS Savings Plans

Cloud buying is getting renewed attention as enterprises seek added cost savings after migrating systems to the cloud in response to COVID-19. It’s time for corporate cloud buyers to learn more about the Amazon Web Services (AWS) Savings Plans, launched in November 2019, which provide cost savings of up to 72% for cloud buyers.

A recent survey of more than 50 IT executives on Pulse.qa, a social research platform, showed that only 16% of IT executives believe that AWS Savings Plans are saving them money on their cloud spending. While the potential for cost cutting is real, you need to understand the nuances of this offering to ensure you’re reaping the biggest savings.

How AWS Savings Plans work

AWS Savings Plans involve a one-year to three-year commitment to a consistent amount of usage measured in dollars per hour. For example, if you commit to $100 of compute usage per hour, you will get the Savings Plans prices on that usage up to $100, and AWS will charge you on-demand rates for any usage beyond the commitment. AWS offers two Savings Plans:

  • The Compute Savings Plan is the most flexible of the two plans. Compute pricing on this plan are up to 66% off on-demand rates.
  • The EC2 Instance Savings Plan provides savings up to 72% off on-demand rates. As a customer, you must commit to a specific instance family in your chosen AWS region. This plan applies automatically to usage regardless of size, operating system, and tenancy within the specified family in the region. 

You can’t increase a Savings Plan budget in the middle of a period of performance. Instead, you’ll need to provision a new and separate Savings Plan.

If you’re running a new AWS account, you may encounter some limitations to your Savings Plans. If this happens to you, it’s best to work with your system integrator or AWS account representative to resolve any restrictions you might be facing.

One advantage of AWS Savings Plan is being able to apply savings to on-demand instances, instead of only reserved instances. Compute Savings Plans can apply to instances across different AWS regions. You can also apply Savings Plans to Fargate (instance-based PaaS for containers) and Lambda.

Copyright © 2020 IDG Communications, Inc.

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