Two ways to pay AWS less, with a real tradeoff
If you run steady workloads on AWS and you are paying full on-demand rates, you are leaving money on the table. The two main tools to fix that are Savings Plans and Reserved Instances. Both work the same way at a high level: you commit to a baseline of spend or usage for one or three years, and AWS discounts you for the commitment.
The difference is flexibility, and choosing wrong locks you into the less useful option. Here is the plain-English version.
Reserved Instances: cheaper, more rigid
Reserved Instances commit you to a specific instance configuration. Standard RIs give the deepest discount but bind you tightly to an instance family and region. Convertible RIs loosen that a little, letting you change configurations, in exchange for a smaller discount.
RIs make sense when your workload is genuinely stable and predictable. You know you will run these specific instances for the term, you are not planning to re-architect, and you want the maximum discount for that certainty.
The risk is the rigidity. Re-architect onto a different instance type or move to serverless mid-term, and a Standard RI can become a commitment you are no longer using.
Savings Plans: more flexible, slightly less deep
Savings Plans commit you to a dollar-per-hour of compute spend rather than a specific instance. Compute Savings Plans are the flexible end: the discount applies across instance families, regions, and even across EC2, Fargate, and Lambda. You change your architecture, and the commitment follows the spend.
For most teams, this flexibility is worth the slightly smaller headline discount. You are buying a discount on "compute," not on "this exact instance," which means a year of architectural change does not strand your commitment.
How we actually decide
The decision comes down to how confident you are in your future architecture:
- Stable, known, not changing: Standard RIs for the deepest discount on the predictable base.
- Steady spend, evolving architecture: Compute Savings Plans, so the discount survives your changes.
- A mix: Most mature accounts use both - RIs for the truly fixed base, Savings Plans for the flexible layer on top.
The mistake we see most is over-committing on rigid Standard RIs, then re-architecting and watching the commitment go to waste. When in doubt, flexibility is cheaper than a stranded commitment.
Find the baseline first
None of this matters until you know your actual steady-state usage. Committing before you understand your usage pattern is how you end up over-committed. That is why a cost engagement starts with looking at the real numbers, not the brochure.
Our Cloud Bill Audit is a one-week review with a written savings plan and dollar figures, for $1,000. Most accounts we look at have meaningful savings hiding, often before any commitment purchase is even on the table.
If your AWS bill has been climbing and you are not sure where the commitment math lands, book a call.