How to Deal With AWS’s Ban On Reserved Instances Resale

You’ve probably heard that AWS is no longer allowing its customers to resell Reserved Instances starting January 15, 2024. If you’ve been reselling unused RI capacity directly on the Marketplace or via a third-party provider, this is no longer an option. Keep reading to learn more about the ban and find a way out.

Quick summary of AWS’s ban on RI resale

AWS will prohibit the resale of Reserved Instances (RIs) acquired at a discount on the Amazon EC2 Reserved Instance Marketplace as of January 15, 2024. This is due to Section 5.5 of the AWS service agreements, which prohibits the sale of discounted RIs. 

However, as a courtesy, customers can still resell discounted RIs for sale on the Marketplace until January 15, 2024 – but only if they were obtained before October 1, 2023.

Full letter from AWS about the RI resale ban

AWS does not permit the resale of RIs obtained through a discount program (per AWS Service Terms 5.5).

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AWS does not permit the resale of RIs obtained through a discount program (per AWS Service Terms 5.5). 

We are extending a compliance period to give customers time to move their RI’s to come into compliance with AWS Service Terms. 

During this time, customer may list any RIs (even if the RIs received a discount) purchased before 1-Oct-2023, on the Amazon EC2 Reserved Instance Marketplace for sale through 15-Jan-2024. 

However, the compliance window will close, and after 15-Jan-2024, customers may no longer have any listings and/or sales of RIs purchased via a discount program on Amazon EC2 Reserved Instance Marketplace.

How to overcome the RI resale ban: Alternatives to Reserved Instances

Solution 1: AWS Savings Plans

One way to deal with the ban when planning your future purchases is to go for AWS Savings Plans instead. 

A Savings Plan is a pricing scheme that offers a discount on On-Demand instances in exchange for committing to one or three years of use, where you set your daily spending limit. Up until that point, all compute usage is available at a reduced cost. When you exceed your limit, AWS charges you the normal on-demand price.

EC2 Savings Plan vs. Compute Savings Plan

EC2 Instance Savings Plan offers up to 72% price reductions on EC2 instances, and you can choose the plan’s size, OS, and tenancy. AWS also provides Compute Savings Plans, which give a similar discount amount (66% versus 72%) and include choices such as family, region, operating system, tenancy, and even individual compute services.

Solution 2: Look beyond commitment for cost savings 

Savings Plans can help you save money on AWS, but you’re still in charge of infrastructure optimization.

This is why picking the right size and type of compute instances is such an important task. If you manage a large cloud environment, you’ll need a system that automates cost optimization activities like rightsizing, autoscaling, instance type selection, and others.

It takes time to figure out which resources are running, which families control them, and whose teams own them. Trying to make sense of all the 500+ EC2 instances offered by AWS is no walk in the park. It can take you many days or weeks to assess your inventory and use it to determine which instances to keep and which ones to get rid of.

AWS policy change means commitment plans are now at a 100% consumption lock-in. Using them for any workloads that don’t have a steady demand is risky. For applications with changing demand, use an automation solution that matches resources to real-time demand.

What you need is a unified K8s automation platform that combines all the cost optimization tactics, including:

• Workload and node rightsizing to achieve optimal setup even without RIs,
• Spot instance automation for up to 90% of cost savings,
• Automated rebalancing to quickly achieve an optimized state,
• Automated bin packing for optimal resource utilization.

CAST AI is a fully automated cloud cost optimization platform that generates cost savings of 60% and more on average, without any sort of vendor lock-in.

Book a call with one of our solution engineers to find out what alternative cost-cutting measures you can take to score cost savings without making any commitments to AWS.

In case you’re not sure what we’re talking about, here’s a primer on AWS Reserved Instances.

Recap: What are Reserved Instances?

Companies pick Reserved Instances because they offer significant savings over pay-as-you-go On-Demand pricing. 

All you need is to make a commitment to a specific cloud capacity for a set length of time. AWS gives you two options: a one-year or three-year commitment. 

In certain situations, you will also be guaranteed that specific resources will be available to you at a particular hosting location. 

Choose an instance type, size, platform, and area, then click Finish. It’s like receiving a coupon that you can use to earn a discount at any moment throughout your selected reservation period, which can be shared across teams.

And the greater your initial payment, the greater the savings.

However, there is a catch. A Reserved Instance has a “use it or lose it” policy. Every hour your instance is idle is an hour lost (along with any financial rewards you could get). To make the most of your Reserved Instance, you must anticipate exactly what your team will require. 

Types of Reserved Instances

Standard Reserved Instances

A Standard Reserved Instance offers greater savings than a Convertible Reserved Instance, but it cannot be exchanged. You could, however, sell them via the Reserved Instance Marketplace (with certain limitations on discounted resources).

This is the type of Reserved Instance the ban addresses.

Convertible Reserved Instances

Convertible Reserved Instances, on the other hand, can be exchanged during the term for a new Convertible Reserved Instance with additional properties such as instance family, instance type, platform, scope, or tenancy. You can’t resell it on the Reserved Instance Marketplace.

Scheduled Reserved Instances

Purchasing Reserved Instances on a recurring schedule lets you pay for compute power by the hour and reserve capacity ahead of time for only the periods when you’ll need it.

Amazon EC2 sets the pricing, and it may fluctuate depending on supply and demand for Scheduled Reserved Instance capacity, as well as the time characteristics of your schedule. However, once you get a Scheduled Reserved Instance, the price you were quoted for is the one you’ll pay.

Key factors influencing Reserved Instance pricing

• Commitment period (1 year vs. 3 years),
• Payment option (Full up-front, Partial up-front, No up-front),
• Region and availability zones,
• Instance type and family you choose.

Reserved Instance Optimization

Reserved Instance Optimization is the process of consistently increasing the value you get from using Reserved Instances. The idea is to maximize your RI consumption and associated charges as your AWS setup and computing demands vary over the course of your subscription.

Here are a few best practices for RI optimization:

• Continuously monitor infrastructure usage – utilization is a key metric for those looking to make the most of reserved capacity, so make sure that you have a viable way to measure it (this includes real-time monitoring).
• Make sure that instances you launch match your discount – AWS will try to match your deployed instances to your current RI discounts, but what if some teams believe that they’re launching instances fulfilling all of the criteria, but in reality they’re not? By not ensuring this, you risk that your contracts will get underutilized.
• Adjust RI purchases based on workload changes – knowing what lies ahead is hard in the cloud world, but it’s still worth it to forecast your predicted usage to have a rough idea how your workload changes may affect your RI buying plan. 
• Use tools and platforms for optimization – tools like the AWS Trusted Advisor come in handy for managing RIs. AWS Trusted Advisor examines your EC2 consumption history and generates an ideal number of Partial Upfront Reserved Instances to help you maximize RI utilization.

The AWS Reserved Instance Marketplace

The AWS Reserved Instance Marketplace is a virtual marketplace where AWS users can sell or buy Reserved Instances from AWS or other third parties. The idea behind it was to provide teams with greater flexibility and savings because estimating workload demands in advance is so hard.

To buy RIs on the Marketplace, you can use the EC2 interface and click the “Purchase Reserved Instances” button on the Reserve Instance screen. From here, you can select the OS, instance type, tenancy, RI duration, and payment method. This is the same interface that consumers use to purchase conventional or convertible RIs, but it now lets them select any period from one month to 36 months.

To sell your RIs as a third party on the Marketplace, you must first register as a seller. The root user of your AWS account needs to sign up.

And let’s not forget about the limitations on reselling RIs. As of January 15, 2024, AWS will restrict the resale of Reserved Instances (RIs) purchased at a discount on the Amazon EC2 Reserved Instance Marketplace. 

Got an AWS Savings Plan instead? Be sure to read this: AWS Savings Plan – Can You Reduce Your Cloud Costs Further?