EC2 Instance Purchasing Options Explained

When using AWS EC2 instances, selecting the right purchasing option can optimize costs based on workload needs. This guide covers on-demand, reserved, savings plans, spot instances, dedicated hosts, dedicated instances, and capacity reservations—helping you understand when and why to use each option.

1. On-Demand Instances

✅ Best for short-term, unpredictable workloads

💰 Highest cost, but no upfront payment

• You pay per second (Linux/Windows) or per hour (other OS).
• No long-term commitment.
• Ideal when you don’t know how long you’ll need an instance.
• Used for development, testing, and short-term projects.

🔹 Example Use Case: Running a web application with fluctuating traffic.

2. Reserved Instances (RI)

✅ Best for long-term, steady workloads

💰 Up to 72% discount compared to on-demand

• Commit to 1-year or 3-year terms for a discount.
• Must specify:
  • Instance type (e.g., t3.medium)
  • Region
  • Tenancy (Shared/Dedicated)
  • Operating System
• Payment options:
  • No upfront (lower discount)
  • Partial upfront (medium discount)
  • All upfront (maximum discount)
• Can be sold or bought in the AWS Reserved Instance Marketplace.

🔹 Example Use Case: Running a database server that needs to be online 24/7.