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AWS Pricing: A Simple Guide to The Most Popular Packages

AWS pricing plans broken down to help you find the right package for your organization.

AWS pricing

Suppose you’re considering a transition to AWS. In that case, understanding the AWS pricing model is key, allowing you to compare it to other cloud platforms to find the best option for your organization. 

As the world’s leading cloud provider, AWS provides over 200 services and cloud products, from machine learning using Amazon SageMaker to advanced developer tools, IoT services, and endless analytics options.

But with many services comes great responsibility. In this case, it’s about being responsible and finding the best plan that meets the requirements of your organization – and that can be a little tricky.

This article will shine a light on the AWS pricing model, helping you save on your cloud computing bill.

How does AWS pricing work?

AWS customers are billed for the time and capacity of resources they use. There are five main pricing plans you can choose from at AWS:

  1. Pay-as-you-go
  2. Reserved instances
  3. AWS spot instances
  4. Savings plans 
  5. Free tier 

Keep reading to find out more about each plan, allowing you to decide which is best for your organization. 

Pay-as-you-go

Also commonly referred to as “on-demand instances,” the pay-as-you-go AWS pricing plan allows you to rent resources on demand.

Although this plan is the most expensive, it’s also the most flexible – you can choose new services to try out with no commitment. You always pay exactly for the resources you’ve used, settling the bill at the end of the month.

If you intend to use AWS services for a while, you might be better off with  one of the other pricing plans (but more on that shortly). 

Reserved instances

You can save anywhere from 30 to 72% on EC2 instances when you choose a reserve compute capacity for an extended period (one or three years).

With reserved instances, the more you pay upfront and the longer the commitment, the more money you’ll save. 

Reserved instances can be applied to other instances, allowing you to save more money. For organizations with consistent computing and cloud resource needs, reserved instances are typically a well-suited option.

But they can be tricky and don’t always lead to fully optimized costs. Read this article to learn more about the trips of reserved instances: ​​Do AWS Reserved Instances and Savings Plans Reduce Costs?

AWS spot instances

AWS spot instances enable you to make use of resources nobody else is using. It’s a way for AWS to reduce the cost of upkeep while providing you with savings on cloud computing services.

But how do they work? Spot instances AWS pricing allows you to purchase unused resources for up to a 90% discount, paid on a pay-as-you-go payment plan.

And while the 90% discount may seem great, the only downside is the following: when another organization purchases the resource capacity, you lose access to it with as little as a two-minute warning.

If you’re using AWS intermittently and have fault and interruption-intolerant workloads, then spot instances can save you a ton of money. By implementing automation solutions, you can take advantage of spot instances even for production workloads. 

Savings plans

Similar to reserved instances, users can pick AWS savings plans.

They allow customers to commit a minimum spending amount (per hour) and usage level for a set period of one or three years.

Committing to a long-term plan allows you to save on the hourly rate of computing resources, including EC2 and Lambda.

There are two main types of savings plans available: compute and EC2.

Compute plans are better suited for systems that require multiple services, including EC2, while EC2 is only applicable to EC2 instances, as you’d expect.

Free tier 

Finally, we have the free tier option – this plan allows organizations to try Amazon services with no commitment.

Within the free tier, you’ll find three sub-tiers:

  1. Always free – It does what it says on the tin, so long as you remain within the resource limits.
  1. 12 months free – Try out numerous AWS services for 12 months. But if you exceed resources at any point, you’ll be paying on-demand rates.
  1. Trials – Short-term trials where you can try various AWS services.

While the free tier is a great addition for new customers. If you’re serious about AWS, chances are you’ll exceed the set limitations rather quickly. And when you do, you’ll enter an expensive pay-as-you-go pricing plan.

So, be aware of your free tier resource limits to prevent an unexpected bill at the end of the month. Still,  using the free tier is a great place to start, experimenting with AWS to see if it works for your organization. 

Related: AWS free tier: what is it, and is it really free?

AWS pricing calculator 

If you’re still struggling with AWS pricing, you can always use the free-to-use AWS pricing calculator

Configure cost estimates based on your business or personal needs, adding provisional services to see how your cloud costs stack up. 

This tool is handy for creating estimates, especially when comparing AWS to other services such as Azure and Google cloud platform.

A few extra tips to help you reduce your AWS cloud computing bill

Many organizations end up paying too much for their AWS cloud computing bill because they pick the wrong payment plan.

For example, if you require a set amount of compute resources or a specific service, you might be better off choosing the reserved instances or savings plan options – or doing the smartest thing, which is investing in automated cloud cost optimization.

Alternatively, if you only need temporary or intermittent cloud services, then spot instances may be the best choice, allowing you to save money on temporary cloud services.

Understand AWS pricing to get the best price for you

AWS pricing can be a little confusing, to begin with.

But once you understand the AWS packages and resource limits, you can choose the right plan for your organization, cutting down your cloud computing costs and making maximum use of your existing resources.

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