How Savings Plans Work: The Commitment Model
The concept behind Savings Plans is straightforward:
- Commitment: You commit to a specific amount of compute usage per hour (e.g., $10/hour) for a term of either one or three years.
- Discount: In return, you receive a substantial discount (up to 75%) on your usage compared to standard On-Demand rates. This discount applies to eligible usage up to your committed hourly amount.
- Automatic Application: The savings are applied automatically across your AWS accounts. There is no need to make manual changes or modifications; the system finds and applies the best discount for you.
- On-Demand Beyond Commitment: Any usage that exceeds your hourly commitment is billed at the regular On-Demand rate.
This "set it and forget it" model simplifies cost optimization, especially compared to the more hands-on management required for some types of Reserved Instances.
The Three Types of Savings Plans
AWS offers three distinct types of Savings Plans, each designed with different flexibility and discount levels.
1. Compute Savings Plans (Highest Flexibility)
This is the most flexible and often recommended type of Savings Plan.
- What it Covers: The discounts apply automatically to:
- Amazon EC2 instance usage, regardless of instance family, size, operating system, tenancy, or AWS Region.
- AWS Fargate usage.
- AWS Lambda usage.
- Key Benefit: The extreme flexibility allows you to modernize your applications—for example, by changing from C5 to C6 instances, moving workloads between regions, or shifting from EC2 to Fargate—without losing your discount. Your savings follow your usage.
- Discount Rate: Offers discounts of up to 66%.
2. EC2 Instance Savings Plans (Highest Discount)
This plan offers the deepest discounts but with less flexibility.
- What it Covers: The discount applies only to a specific EC2 instance family in a specific AWS Region. For example, you could commit to
c6ginstances inus-east-1. - Key Benefit: It provides the largest discount, up to 72%, which is equivalent to the discount offered by Standard Reserved Instances.
- Flexibility: While you are locked into the instance family and region, the savings will automatically apply to any size within that family (e.g.,
c6g.large,c6g.xlarge,c6g.2xlarge).
3. Amazon SageMaker Savings Plans
This is a specialized plan for machine learning workloads.
- What it Covers: The discount applies specifically to Amazon SageMaker instance usage, including SageMaker Studio notebooks, Notebook Instances, Processing, Data Wrangler, and Training jobs.
- Key Benefit: Provides a discount of up to 64% on your SageMaker compute usage. Like Compute Savings Plans, it is flexible across instance families, sizes, and regions.
Comparison of Savings Plans Types
| Feature | Compute Savings Plan | EC2 Instance Savings Plan | SageMaker Savings Plan |
|---|---|---|---|
| Services Covered | EC2, Fargate, Lambda | EC2 Only | SageMaker Only |
| Max Discount | Up to 66% | Up to 72% | Up to 64% |
| Region Flexibility | Yes | No | Yes |
| Instance Family Flexibility | Yes | No | Yes |
| OS Flexibility | Yes | Yes | N/A |
| Tenancy Flexibility | Yes | Yes | N/A |
| Best For | Maximum flexibility, modernizing applications. | Highest savings on stable, predictable EC2 usage. | Dedicated ML workloads on SageMaker. |
Savings Plans vs. Reserved Instances (RIs)
Savings Plans were introduced as a more flexible successor to Reserved Instances. Here’s how they compare:
| Aspect | Savings Plans | Standard RIs | Convertible RIs |
|---|---|---|---|
| Commitment | $/hour | Specific instance attributes | $/value |
| Flexibility | High (Compute SP). Automatically applies across regions & families. | Low. Locked to instance family, region, OS, tenancy. | Medium. Can be exchanged for other RIs. |
| Management | Low. "Set it and forget it." | Medium. Requires management of a portfolio. | High. Requires manual exchanges. |
| Capacity Reservation | No (Optional) | Yes (Optional) | Yes (Optional) |
The primary reason to still consider Standard RIs is for the capacity reservation. When you purchase a Zonal RI, AWS reserves that specific instance capacity for you, which can be critical for mission-critical workloads that must be able to launch in a specific Availability Zone.
How to Purchase and Manage Savings Plans
- Get Recommendations: The best place to start is AWS Cost Explorer. It analyzes your historical usage (typically over the last 7, 30, or 60 days) and provides tailored recommendations for a Savings Plan commitment that will maximize your savings.
- Choose a Plan: Based on the recommendations and your future plans, select the plan type (Compute, EC2, or SageMaker), term (1 or 3 years), and payment option (All Upfront, Partial Upfront, or No Upfront).
- Purchase: You can purchase the plan directly from the AWS Billing and Cost Management console.
- Monitor: Once purchased, the savings will be applied automatically. You can track your Savings Plan utilization and coverage in AWS Cost Explorer to ensure you are getting the most value from your commitment.