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Our organization has many EC2 on-demand instances. We never looked at the reserved instance pricing because we thought we had to pay up-front. But I see that now there are reserved instance with no up-front costs, but monthly.

This looks like what we need to keep costs down, but I am unclear as to how the reserved instance pricing is applied.

For example, we have 10 t3.medium ec2 instance. Let's say that there are 6 always running 24/7, but the other 4 are not running 24/7, they are turned off when not in use.

If I buy a reserved instance for t3.medium, how does AWS know to apply it to the instances running 24/7 and not part time?

Ed Mendez
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1 Answers1

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For example, we have 10 t3.medium ec2 instance. Let's say that there are 6 always running 24/7, but the other 4 are not running 24/7, they are turned off when not in use.

If I buy a reserved instance for t3.medium, how does AWS know to apply it to the instances running 24/7 and not part time?

Amazon doesn't apply reserved pricing to a specific instance at all. It basically just applies reserved pricing to your bill. It's like a discount at the time your bill is processed. If you have reserved pricing for N instances, and you have at least N instances running 24/7 reflected in your bill, then the reserved pricing gets applied to those N instances.

Amazon doesn't really care if you are running a single specific instance 24/7, or deleting and recreating instances once a minute. In the end it's just the total number of seconds you have a specific type of instance running each month that they care about, and bill you for.

Be aware that when you setup instance reservations it is actually a capacity reservation. You are telling Amazon you are committing to running this type of instance 24/7 for either 1 year or 3 years. By letting Amazon know this, it helps with their capacity planning, and in return they give you a cost discount. But it also means that they are going to charge you for that reserved capacity even if you don't actually have that instance running 24/7.

Mark B
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  • So If I buy reserved instance for t3.medium and I have a t3.medium EC2 instance that has not been running 24/7 for the billing period, the discount will not apply? – Ed Mendez Oct 19 '22 at 18:02
  • You'll end up paying for a t3 medium, at the discounted rate, but for the full time period, instead of just the time period the instance was running, because you reserved the capacity for the full time period, even though you didn't use it the full time. – Mark B Oct 19 '22 at 18:26