Arezou Seifpour - May 05, 2017

Make the Right Decisions About the Latest AWS Price Drop and New RIs

Learn how to make better decisions that factor in the new AWS EC2 price drops and the new three-year no-upfront Standard RI. Let's go over what both of these announcements mean and what you should do to start reaping the savings.

AWS just announced its 61st price reduction. Read on to learn how to make better decisions that factor in the EC2 price drops and the new three-year no-upfront Standard RI. We’ll start by going over what both of these announcements mean and what you should do to start reaping the savings.

Price Reduction for M4 Instance

The general-purpose M4 instance family features a great balance between CPU and RAM, and is often the go-to for starting out on AWS – and now it’s 7% cheaper. If you’re already using M4s, you’ll see these savings immediately (and hopefully you’re seeing these savings in your awesome Cloudability EC2 Dashboard). Note: this price reduction only applies to M4 instances running Linux.


If you’re using M4s, you’re seeing savings already!

Unless you have a really good reason to stick with the older generation M3s (you need local SSD storage, etc.), now’s a great time to start moving en masse to M4. Quickly comparing the M4.large with the M3.large on Linux, moving to M4 gets you 6.3% more memory, access to Intel 5th-generation processors (over the M3’s 3rd and 4th-gen) and EBS optimization — on top of that, it’s 18.8% less expensive.

As with many AWS instance price reductions, these changes are automatically applied.

For more info about choosing the right EC2 instances for your infrastructure, check out our free guide. If you’re thinking, “Nah, I understand EC2 instances pretty well,” you might be very interested in how to rightsize compute instances to maximize their efficiency.

Price Reduction for Reserved Instances

There were 60 previous price reductions by AWS, most of which reduced EC2 prices. What’s more rare is a price reduction on RI costs. Please keep in mind that not all RI purchase options or instance families are affected. The new price reductions apply to one-year no-upfront Standard RIs and three-year Convertibles RIs.

If you need a quick refresher on Convertible RIs, check out our previous post.

Will RI Price Savings Automatically Apply?

Only new reservations made after this announcement will qualify for the price reduction. Now’s the time to take a look at upcoming EC2 reservations that are about to expire and start planning accordingly if you’re in the market for one-year no-upfront Standard or Convertible RIs.

New RI Option: Three-Year, No-Upfront

Before we dig into the new RI option, let’s recap the different payment options for RIs:

  • All-Upfront: Paying for the entire reservation term in one upfront payment offers the highest savings rate.
  • Partial-Upfront: This options means paying for part of the reservation term in an upfront payment, and then paying the remaining amount in monthly installments. The savings rate from this option is higher than no upfront, but lower than all upfront.
  • No-Upfront: Paying for the reservation in monthly installments throughout the term’s duration offers the lowest savings rate, but doesn’t require any kind of advanced payment.

Before the release of this new RI option, there were only two payment modes for a three-year Standard RI: partial-upfront or all-upfront. This new three-year no-upfront RI covers the gap, adding a new savings vehicle for anyone interested in long term compute reservations.

Note: according to the news release, this RI option is available for the current-generation C4, M4, R4, I3, P2, X1 and T2 families, but excludes the D2, G2 and F1 families.

While this new RI option doesn’t require any form of upfront payment, keep in mind that it’s a commitment to the entire term of the reservation. Businesses and enterprises come in all shapes and sizes, as do their infrastructures on the cloud. This new RI offering is an option for those who want to capture long-term reservation savings, but don’t want to pay the upfront cash.

Understand Your Savings Priorities

Comparing the new three-year no-upfront Standard RI versus the no-upfront Convertible RI (also a three-year term) leads to a few interesting considerations. The pricing of this new option might have the better rate, but it lacks the flexibility of the no-upfront Convertible. To understand these differences, we built a grid to show the different options:

One advantage of the Convertible RIs is their ability to “de-risk” a long-term compute commitment by giving users the ability to exchange the RI as infrastructure needs change over the course of years of operation. This places a higher business priority on flexibility over maximum costs savings. As you start (or continue) your RI purchases, be sure to understand your business priorities.

These are just a few of many considerations required to make sound RI buying decisions. In our history working with large companies managing massive RI portfolios, having strong, data-backed RI recommendations is key to increase savings.

Cloudability Support for the New RI Option Is Available

The Cloudability team is always keeping an eye on these price reductions, letting our users know the immediate steps they can take to lower costs. Hop into our app today to see how you can save on your cloud (we have a free trial if you’re burning to get started).

Support for the new RI option is now available in our RI Recommender. Please give it a try and definitely reach out with questions or feedback. Sign up using the newsletter box below to get immediate updates on this and other AWS news.

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