“Using Reserved Instances can save you money.” – it’s a phrase often repeated – but is it always true?

Using AWS Reserved Instances is certainly meant to save you money. And as with any cost saving strategy, it has a learning curve. In order to make the most of your RIs, be sure to avoid these three potential pitfalls when purchasing AWS Reserved Instances:

Mistake #1: Always purchasing All-Upfront Reservations

Many businesses over-simplify Reservation purchasing by assuming that the All-Upfront payment option is the best choice simply because if offers the highest savings rate.

While All-Upfront Reservations can serve well to cover your core infrastructure needs, choosing Partial-Upfront Reservations will actually provide a greater benefit. Why? Because choosing a Partial-Upfront RI will result in something called the “injected line-item.” Essentially this is additional data in your AWS Detailed Billing Report (DBR) which can be leveraged through Cloudability to run more in-depth analysis on your EC2 deployment; the injected line-item is simply not available with an All-Upfront Reservation.  These more nuanced needs may be tough to calculate without some Cloudability help, however they certainly shouldn’t be ignored.

Mistake #2: Infrequent RI purchases

Many businesses will limit the frequency with which they purchase Reservations. However, not only can this severely restrict potential savings, it can also cost you money. Remember, when you make a Reservation purchase, you commit to pay for every hour of the RI term regardless of whether the RIs are used or not. Additionally, when you make a massive RI purchase once a year, changes to your infrastructure within that year may result in changing RI needs; a single large RI buy represents a huge sunk cost on the RIs which you may no longer use effectively.  On the other hand, taking an iterative approach and buying a subset of the total available Reserved Instances every month results in a better alignment and steady rollover. This allows you to phase out Reservations that are no longer necessary to your changing infrastructure, and to continually refresh your Reservations and keep them aligned as your infrastructure changes.

Mistake #3: Calculating RI needs incorrectly

It’s unfortunately common for businesses to use improper calculation methods in determining their Reservation needs, which can result in potential missed opportunities – or worse, in unnecessary RI purchases. This happens because businesses calculate their needs according to the overall utilization rates for their instances, rather than considering when they run in relation to each other. For example, if in a given timeframe 3 unique instances happened to run, but each for only 30% of that timeframe, the incorrect approach to determining RI needs would result in the purchase of three corresponding Reservations. If it happened that all three instances ran at mutually exclusive times this would result in at least one instance running 90% of the time. In this case a sensible recommendation may be to purchase one reservation. The best RI purchasing decisions are based on hourly instance counts of each instance type per OS and availability zone — calculations that Cloudability is happy to do for you automatically, with our Reserved Instance Planner tool.

Luckily, the Cloudability Reserved Instance Planner does all the calculations for you! Login or start a free trial of Cloudability Pro to check out our Reserved Instance Planner, and let us optimize your cloud costs today.