AWS Savings Plan vs Reserved Instances: Which Should You Use?
Deciding between AWS Savings Plans and Reserved Instances is a critical choice for any organization looking to optimize its cloud spending. The fundamental difference lies in flexibility versus the depth of discount. Reserved Instances (RIs) offer the deepest savings, with discounts reaching up to 72%, but they require a commitment to a specific instance family and AWS region. This makes them ideal for workloads that are highly stable and predictable over the long term. In contrast, AWS Savings Plans provide a more adaptable model, offering significant discounts that automatically apply across various services, instance families, and even regions, catering to dynamic and evolving application architectures.
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Figuring out which AWS discount model to use is a huge deal for any team trying to get their cloud bill under control. Both Reserved Instances (RIs) and Savings Plans (SPs) can save you a ton of money over On-Demand pricing, but they’re built for very different needs. This isn't just about grabbing the biggest discount; it's about matching your purchasing strategy to how your applications actually run. Choosing correctly can mean the difference between thousands of dollars saved and a commitment that becomes a financial burden. This guide will walk you through the nuances of each model, helping you make an informed decision based on practical scenarios and data-driven strategies.
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Understanding the Core Differences
At their core, AWS Savings Plans and Reserved Instances operate on fundamentally different premises. When you purchase a Reserved Instance, you are committing to use a specific type of server, such as an m5.large instance located in the us-east-1 region. It is a very concrete and rigid commitment that rewards stability with high discounts. This model has been a cornerstone of AWS cost optimization for years, offering a clear path to savings for predictable workloads.
Savings Plans, introduced by AWS in 2019, take a different approach. With a Savings Plan, you commit to spending a specific dollar amount per hour on compute—for example, $5/hour. AWS then automatically applies that discount to any eligible usage you have across EC2, Fargate, and Lambda. This single distinction is what drives all the other differences in flexibility, coverage, and where each model makes the most sense. This flexibility was designed to address the challenges modern, agile teams faced with the rigid nature of RIs, allowing them to innovate without being penalized for infrastructure changes.
To provide a quick snapshot of how these two models compare, the table below breaks down their key attributes.
| Feature | Reserved Instances (RIs) | Savings Plans (SPs) |
|---|---|---|
| Commitment Type | Specific instance family, region, OS | Hourly dollar spend ($/hour) |
| Maximum Discount | Up to 72% (Standard RIs) | Up to 72% (EC2 Instance SPs) |
| Flexibility | Low; locked to instance family/region | High; can change instance family, region, OS |
| Service Coverage | Primarily EC2 and RDS | EC2, Fargate, and Lambda |
| Best For | Stable, predictable, long-term workloads | Dynamic, evolving, or uncertain workloads |
| Marketplace Resale | Yes (Standard RIs only) | No |
As you can see, the choice depends entirely on how predictable your infrastructure is. One offers deeper discounts for certainty, while the other provides adaptability for modern, evolving architectures. Getting a handle on these trade-offs is the first step toward a solid cost optimization strategy. For more advanced techniques, check out our guide on effective AWS cost savings recommendations.
When to Use AWS Reserved Instances
Reserved Instances are the original AWS discount model, built to reward long-term commitment with significant cost savings. You should consider RIs when your application's infrastructure is stable, its usage is predictable, and you can confidently forecast your compute needs over the next one to three years. Unlike the more flexible Savings Plans, RIs lock you into a specific instance family and region, making them a perfect match for steady-state workloads that run consistently without much change. This commitment model has been a pillar of cloud cost optimization for years, offering some of the deepest discounts available, often hitting 72% off On-Demand rates.
When you purchase an RI, you have a few decisions to make that directly affect your discount and cash flow. First is the commitment term, which can be either one or three years, with the three-year option providing a much better discount. Next, you choose a payment option: All Upfront (for the best discount), Partial Upfront (a balance between discount and cash flow), or No Upfront (the smallest discount but no initial investment). AWS also offers two types of RIs: Standard RIs, which provide the deepest discounts but are very restrictive, and Convertible RIs, which offer slightly lower discounts (up to 66%) but allow you to exchange your reservation for one with different attributes, as long as the new one is of equal or greater value.
Reserved Instances truly shine in environments defined by stability. If you have workloads that are critical and run 24/7, such as production databases, core application servers, or essential support services like a centralized logging server, RIs are your best financial weapon. The rigidity of a Standard RI is not a bug; it is a feature that enables you to maximize savings on compute resources you know you will be using non-stop. Before locking in, it's crucial to perform a thorough analysis, a process detailed in our guide on AWS EC2 Right-Sizing.
Pro Tip: For FinOps teams managing stable workloads, the ability to sell Standard RIs on the RI Marketplace provides a valuable escape hatch if priorities unexpectedly shift, a feature not available with Savings Plans.
When to Use AWS Savings Plans
While Reserved Instances are about locking in a price for a specific server, AWS Savings Plans are designed for flexibility. Introduced in 2019, they address the primary drawback of RIs: their rigidity. For agile teams or those managing constantly evolving microservices, being locked into one instance family in a single region is a significant operational drag. Savings Plans solve this by changing the commitment model. Instead of committing to a specific instance, you commit to an hourly spend, such as $10/hour, which AWS automatically applies as a discount across your eligible EC2, Fargate, and Lambda usage.
AWS offers three types of Savings Plans, each balancing flexibility and savings differently. Compute Savings Plans are the most flexible, applying discounts across instance families, sizes, operating systems, and even AWS Regions, making them ideal for diverse, geographically scattered workloads. EC2 Instance Savings Plans offer deeper discounts, up to 72% (on par with Standard RIs), but require a commitment to a specific instance family within a single AWS region. Finally, SageMaker Savings Plans are specialized for machine learning workloads on Amazon SageMaker. You can get a more detailed breakdown of how a basic AWS Savings Plan works in our guide.
The real power of Savings Plans becomes evident when modernizing your infrastructure. For instance, if your team decides to upgrade from c5 instances to more efficient c6g instances, a Compute Savings Plan automatically transfers the discount without any manual intervention or financial penalty. With RIs, you would be stuck with useless c5 reservations that you'd have to try to sell on the marketplace, likely at a loss. This seamless transition is a game-changer for teams that need to innovate quickly. A common point of confusion is what you're actually promising to pay for. With a Savings Plan, you're committing to spend a certain amount of money per hour for a one or three-year term. A $10/hour commitment means you are billed that amount every single hour, whether you use that much compute or not.
Building a Hybrid Strategy
In the AWS Savings Plan vs Reserved Instances debate, the most effective approach is often not choosing one over the other but creating a hybrid strategy. This layered model combines the deep discounts of Reserved Instances with the adaptability of Savings Plans, allowing you to maximize savings without sacrificing the agility needed for innovation. By blending both, you get the best of both worlds: rock-bottom prices for your most predictable workloads and flexible coverage for everything else.
The first step is to identify your "stable baseline"—the absolute minimum amount of compute your organization uses 24/7. This can be determined by analyzing your hourly On-Demand compute costs over the last 30 to 60 days in the AWS Cost and Usage Report (CUR). This baseline is the perfect candidate for Standard RIs, as its usage is guaranteed, making it a safe, high-value commitment. Be conservative and only commit the portion of your usage that is absolutely stable and predictable to RIs.
AWS Cost Explorer recommendations.
Maximizing Your Commitment ROI with Scheduling
When evaluating AWS Savings Plans vs. Reserved Instances, it's easy to focus solely on discount percentages. However, both models operate on a simple rule: you only save money on compute you actually use. Every hour an instance covered by a commitment sits idle, you are paying for something you don't need, which erodes your return on investment. This is particularly true for non-production environments—development, testing, and QA servers—that often run 24/7 but are only needed during business hours.
This is where automated server scheduling becomes a powerful FinOps tool. By using a scheduler like Server Scheduler to power down non-production resources during nights and weekends, you can eliminate waste and concentrate your usage into a predictable window. This immediately cuts costs by stopping payment for idle resources and creates a dense block of utilization that is a perfect target for a cost-saving commitment. You can learn more about how to start and stop EC2 instances on a schedule to implement this strategy effectively.
With automated scheduling, your approach to buying RIs and Savings Plans can be transformed. Instead of guessing or over-provisioning, you can analyze your new, condensed usage pattern and make a smaller, more confident purchase. By first scheduling shutdowns for all non-production resources outside of business hours and then analyzing your new, flatter baseline in AWS Cost Explorer, you can purchase a Savings Plan or RI that precisely covers your actual runtime. This enables you to achieve nearly 100% utilization on your commitment, turning it from a potential financial gamble into a guaranteed savings engine.
Frequently Asked Questions
When you're weighing AWS Savings Plans vs. Reserved Instances, a few common questions always pop up. Getting these sorted out is key to avoiding costly mistakes and making a decision that actually fits your team's workflow and budget.
Can I sell my AWS Savings Plan if I no longer need it? No, you cannot. This is a crucial distinction. Unlike Standard Reserved Instances, which can be sold on the RI Marketplace, AWS Savings Plans are not sellable. Once you commit to a one or three-year term, you are locked in. This lack of an exit strategy means you must be confident in your long-term spending forecast, as you cannot recoup costs if your infrastructure needs suddenly pivot.
Do Savings Plans reserve capacity? Another common misconception is that Savings Plans reserve capacity, but they do not. They are purely a financial discount applied to your On-Demand usage, giving you a better price but not a guaranteed spot. If you need to ensure capacity for a critical workload in a specific Availability Zone, you must still purchase a Zonal Reserved Instance for that AZ. This is vital for applications that cannot afford to be disrupted during high-demand events.
How do I choose between a Compute SP and an EC2 Instance SP?
This choice hinges on the predictability of your infrastructure. Opt for an EC2 Instance Savings Plan if you are confident your usage will remain within a single instance family (like c6g) and a single AWS Region, as this will reward you with the highest possible discount (up to 72%). Conversely, choose a Compute Savings Plan if you require the freedom to change instance families, move between regions, or shift from EC2 to Fargate. The discount is slightly lower (up to 66%), but the flexibility is often invaluable for dynamic environments.
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