When organizations are looking into implementing the public cloud into their environment, it can be difficult to understand some of the pricing models. Amazon has revised its pricing model for reserved instances in order to provide a simple interface that allows customers to get the best deal possible on IaaS.
In a blog post released on December 2nd, Amazon Web Services evangelist Jeff Barr noted that there would be three distinct billing categories for reserved instances. Barr also mentions that there is now only one type of reserved instances and organizations can fetch up to 63% in discounts using the new pricing methodology.
When organizations buy AWS reserved instances up front, they will be required to agree to a term between one and three years. Once that agreement is made, the organization is billed ahead of time which in turn, saves money for organizations that would have purchased these services anyways.
When new clients at Amazon Web Services pay partially upfront, they must agree to a one to three year term in order to get a discount on pricing. This model allows a client to part of the upfront fee which will help them net a discount on reserved instances.
Amazon will allow you get reserved instances with out upfront costs. Although clients must agree to a specific term, which is one year, the no upfront option allows organizations to effectively plan out their public cloud on a pay as you go basis. Although the no upfront option provides the least amount of discounts, the option does allow organizations to save over 30% on IaaS costs when using reserve instances as opposed to on-demand instances.
More information about the new pricing model for AWS reserved instances can be found on Amazon’s blog and its reserve instances FAQs which was recently updated due to the changes in pricing structure.