Amazon Announces Reserved Instances For EC2

Amazon just announced a reserved instances plan for EC2. This new option significantly reduces costs for Linux/UNIX users. This option is not available for Windows users as of this time. The way it appears to work is this:

  • User buys  block of hours that is good for a 1 or 3 year term.
  • User consumes hours and has this usage debited from the prepaid block of time.
  • If the user fails to consume their hours within the 1 or 3 year term, the money is gone.

The 1 year blocks sell 10833 hours. The 3 year blocks represent 16667 hours. For comparison, a week has 168 hours, a year has 8760 or 8784 hours (leap year dependent). Here’s a cost comparison of the offerings:


1 yr Block of hours

Pay as you go

3 yr Block of hours

Pay as you go
















High CPU/Medium





High CPU/Large






A couple of things jump out at me. First, I wonder if anyone would ever use the Standard/Large instance when the High CPU/Large was available for the same price. The only use case I see is where someone has a Standard/Large humming along perfectly and they don’t want to incur the costs for testing the switch. It seems like it will be cost effective to run a server all year round at these new prices– depending of course on your storage needs.

With these reserved instances, there are a number of restrictions. Keep in mind that Amazon is able to reduce the prices because you are agreeing to lock yourself into a usage mode. In order for you to win, they need to win too! What are the restrictions? From the FAQ, I see these:

  1. You can purchase 1 to 20 instances through website. Instances 21+ require special permission (though it doesn’t look onerous).
  2. Reserved instances live in one and only one availability zone. You are locked into that one for the contract duration. This shouldn’t be a huge restriction since, even when you purchase ahead of time, you come out ahead after consuming 20% of your hours in a high CPU contract and after 30% of your hours in the standard plans
  3. Once you purchase an instance type, you can’t convert things to a different instance type later. You stick with what you purchased. Again, risk is low since if you made a mistake, you can throw away 69% of your hours and still come out ahead of the pay as you go route.
  4. As mentioned above, if you don’t use it, you lose it. Unconsumed hours disappear after the 1 or 3 year term.

This looks like a good deal. I can’t wait until the comparable Windows plan is rolled out!

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