(WEB HOST INDUSTRY REVIEW) — After bringing the on-demand, pay-as-you-go pricing model to the web development community, Amazon Web Services has introduced “Reserved Instances,” an additional pricing option for Amazon Elastic Compute Cloud that gives users the option to make a low, one-time payment for an instance to reserve capacity and receive a significant discount on the hourly usage charge for that instance.
According to Amazon’s Thursday announcement, as with on-demand instances, customers still pay only for the compute capacity actually consumed, and unused reserved instances are not charged beyond the one-time reservation fee.
According to Amazon, reserved instances give businesses even more flexibility to reduce computing costs and function identically to existing Amazon EC2 on-demand instances, however, it helps Amazon EC2 users plan for an anticipated amount of capacity. Reserved Instances are available in 1-year or 3-year terms.
Jeff Barr noted in an Amazon Web Services blog entry that this complementary instance type helps EC2 take businesses’ requirements into account.
“We’ve learned that some of our customers have needs which aren’t addressed by the spot [or on-demand] pricing model,” Barr wrote. “For example, some of them were looking for even lower prices, and were willing to make a commitment ahead of time in order to achieve this. Also, quite a few customers actually told us something even more interesting: they were interested in using EC2 but needed to make sure that we would have a substantial number of instances available to them at any time in order for them to use EC2 in a DR (disaster recovery) scenario. In a scenario like this, you can’t simply hope that your facility has sufficient capacity to accommodate your spot needs; you need to secure a firm resource commitment ahead of time.”
For steady users, reservation can be cheaper than the hourly, on-demand model. For example, an on-demand EC2 Small instance costs 10 cents per hour, however for a $325 one-year reserved instance term, the hourly rate drops to $0.03 per hour.
“Think of the one-time fee as somewhat akin to acquiring hardware, and the hourly usage as similar to operating costs,” Barr wrote.
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