AWS EC2 Instance Pricing Model

Rashmi Bhardwaj | Blog,Cloud & Virtualization

AWS EC2 Instance Pricing Model

Amazon Elastic Compute Cloud is a web service that provides resizable compute capacity in cloud. You can boot new servers within minutes using this service. Usually physical servers earlier took around days to month’s provision. Compute resources are now available as VM in Amazon cloud EC2.

Amazon’s pricing principle for most of the services:






In this post we will see what the Amazon’s Pricing Models for EC2 instances are. We have mainly four types of EC2 pricing models listed in the table below


aws ec2 instance pricing model

On Demand:

  • With on demand EC2 instances you only pay for compute capacity you use by hours or by seconds depending on the instance types.
  • For Linux instance is by the second and windows instance is by the hour.
  • There are no long term commitments with this instance type and also no upfront costs are involved.
  • You can increase/decrease the compute capacity needs depending on your applications requirement.
  • On Demand is perfect for the users who want low cost and flexibility of Amazon EC2 without any up-front investment or long-term commitment.
  • It is suitable for the applications with short term, spiky or unpredictable workloads that cannot be interrupted.

Spot Instances:

  • Spot EC2 Instance lets bid for the spare compute capacity from Amazon at heavy discounts of up to 90% of the On-Demand price.
  • Primarily useful for the applications that have the flexible start & end times.
  • Useful for urgent computing needs that may require large capacity.
  • If a spot instance is terminated by Amazon EC2, you won’t be charged for the particular hour of usage but if its terminated by you, then you will be charged for any hour in which the instance ran.

Dedicated Instances:

  • Dedicated Instances are physical EC2 servers that are dedicated for your use.
  • Dedicated hosts are used to address compliance requirements and reduces host by allowing to use your existing server-bound server licenses.
  • It can be purchased as a Reservation for up to 70% off On-Demand price.
  • Dedicated hosts can be purchased hourly.

Reserved Instances:

  • Reserved instances involve making a compute capacity reservation with AWS on contractual basis. The contract for the reserved compute capacity could be anywhere between 1-3 years.
  • Upfront cost is involved when selecting this type of EC2 instance.
  • It is useful for applications with steady state or predictable usage.

There are three types of Reserved Instances:

  • Standard reserved instance: It provides a discount of up to 75% off on demand. The more you pay upfront and larger the duration of contract the larger the discount.
  • Convertible reserved instance: It provides a discount of up to 54% off on demand. It provides the feature that has the capability to change the attributes of RI as long as the exchange results in the creation of Reserved Instances of equal or greater value.
  • Scheduled reserved instance: Scheduled Reserved Instances are available to launch within the specified time window you reserve. It allows you to match your capacity reservation to a predictable recurring schedule.

Related – Autoscaling in AWS


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