Like most AWS users you’re probably fed up hearing that you’re overspending by 20/30/40% and that you’re not taking advantage of the discounts on offer. And you’re probably also fed up being offered “free” bill assessments or trials of tools that provide reams of data but don’t tell you what should actually do.
You already know you should buy reservations or Savings Plans, what holds you back is understanding what to buy and when. In this guide we cover the most important things to know to get real discounts on your AWS spend.
Compute Savings Plan give you the greatest flexibility, EC2 Savings Plans less flexibility but a greater discount
Don’t wait: incrementally buy small Savings Plans so that you’re at least getting some discount
Purchase in a separate account to get the greatest coverage across your resources
What are Savings Plans?
Savings Plans are an AWS pricing discount program, which provides a flexible approach for cost optimisation for your AWS compute usage. Savings Plans come in 2 forms: Compute Savings Plans & EC2 Instances Savings Plans, which offer up to 66% and 72% savings respectively.
To obtain the discount customers are required to commit to an hourly spend across a period of time (1 or 3 years) and the payment, similar to EC2 Reserved Instances (RIs) can be all upfront, partial upfront or no upfront.
Savings Plans have largely superseded RIs for Compute and EC2 (see note about Capacity Reservations below). Savings Plans are what you need.
Compute Savings Plans
Compute Savings Plans offers up to 66% discounts compared to on-demand rates and provide the most flexibility. They will apply to all EC2 instances, Fargate and Lambda functions in any region and across any instance family.
EC2 Instance Saving Plans
EC2 Instance Savings Plans the offer the largest savings, up to 72% discounts compared to on-demand rates and can only be applied to a specific instance family in a specific region.
Where to Purchase?
Savings Plans are a billing construct that means where you make the purchase is very important, and if purchased in the wrong account could lead to reduced savings.
The most optimal account to purchase Savings Plans is one which has no resource usage. Due to the way Saving Plans discounts are applied, the priority is on resources in the account where they are purchased and then to apply to all remaining linked accounts, with the highest discounted resources first. If you have low discounted resources in that account then you are not getting the most out of your Savings Plans and miss out on bigger discounted resources.
Things to Consider
Understanding your company roadmaps and future cloud plans will help you make the right choice when deciding how much hourly spend you want to commit. Understanding if compute spend is expected to increase, decrease or remain steady will help you make an informed purchase and whether to go with a Compute Savings Plans or an EC2 Instance Plan.
Buy it big or buy it small? Based on our experience, most companies are uncomfortable in committing to a large Savings Plans coverage, as they are unsure what the future holds, and are worried about wasted costs. Regular reviews and small incremental Saving Plans purchases help to get immediate savings, build up the coverage and gain confidence.
Unlike EC2 RIs, Savings Plans do not provide capacity reservations. If this is required you can reserve capacity with On-Demand Capacity Reservations and pay a lower price with Savings Plans.
Savings Plans cannot be sold or exchanged on the Marketplace (EC2 RIs can). You will need to take into consideration roadmaps and future cloud plans as you could start to see ‘waste’ spend if not managed.
Establish an approval process for buying Savings Plans and Reservations. This should help to reduce the processing time and inform stakeholders of changes.
Make sure you have alerts enabled for when Savings Plans are due to expire. You don’t want to get an unexpected increase in costs due to an expired Savings Plans.
What to Avoid
Hesitation – The longer you wait the more money you waste. Waiting for the perfect information will impact your savings opportunities.
Tools or “free” cost review savings that don’t understand your organisation or planned usage. Remember, you can’t API business context.
How FutureProof can Help?
At FutureProof we take time to understand your organisation and cloud usage and then guide you through the process of purchasing Savings Plans and make recommendations on both Compute Savings Plans and EC2 Instance Savings Plans. We track your savings and show how much you’ve saved through Savings Plans and compare the savings you’ve made. We also help to configure policies and put guardrails in place to alert on changes to your cloud infrastructure.
We’ve got great experience in this area and the organisations we work with are each savings thousands of dollars a month on their cloud bills.