100 Days of AWS: Day 8: Selecting the EC2 Pricing Model.

Week 2 of the challenge Welcome! We are moving away form the fundamentals to the basic blocks of applications. We will start with the simplest compute service Amazon EC2.

The Question

A startup is launching a new web application with a predictable, steady workload. The server must run 24/7 for the next year to serve customers reliably. They want the most cost-effective solution for this long-term commitment.

Which EC2 pricing model should they choose?Vote for your answer below! 👇

The Correct Answer

The right solution is (C) Reserved Instances.

Reason Why: Dedication is Saving.

Reserved Instances (RIs) are not an alternative type of instance; it is a billing discount on On-Demand instances. You will get a big discount (up to 72) off On-Demand prices in exchange for committing to a particular instance type in a particular region on a 1 or 3-year term.

• The following scenario is used in the textbook use case of RIs:
• Regular workload: The server is online 24/7.
• Long term commitment: They are aware that it will last more than a year.
• It is important that it is cost-effective: RI offers the optimal price on such sustained usability.
• Discussion of the Fallacies of the Incorrect Choices.

(A) Spot Instances: these are unused EC2 computing capacity that AWS provided at a huge discount. Nonetheless, AWS is able to recover this capacity within only two minutes warning. This renders them entirely unsuitable to a primary web server which need to be online all the time. Spot Instances can be used with fault-tolerant, interruptible workloads, such as big data analysis, batch jobs, or CI/CD pipelines.

(B) On-Demand Instances: The most flexible one is the On-Demand Instances. You pay by the second using compute power without any long term contract. Although it fulfills the always available requirement, it is not the most economical solution to a workload that is continuously operating through a year. On-Demand is best suited to development, testing and applications that have unpredictable and spiky traffic.

(D) Dedicated Hosts: It is a high-end product whereby the customer rents a full physical server to use. It is the most costly model, and most commonly is employed to cover corporate compliance or complicated software licensing situations (e.g., Windows Server or SQL Server licenses). It is excessive and not cost effective in this situation of the start up.

Quick Comparison Table

Pricing Model	Best For	Cost	Commitment
On-Demand	Unpredictable / Dev & Test	Highest	None
Reserved	Predictable / Steady-State	Medium (Big Discount)	1 or 3 Years
Spot	Interruptible / Batch Jobs	Lowest (Huge Discount)	None
Dedicated	Compliance / Licensing	Very High	1 or 3 Years

Keywords:

• EC2 Pricing
• AWS Pricing Models
• On-Demand Instances
• Reserved Instances (RIs)
• Spot Instances
• Cloud Cost Management
• AWS FinOps
• EC2 Cost Optimization
• AWS Savings Plans
• Dedicated Hosts
• AWS Billing
• Cloud Economics
• TCO (Total Cost of Ownership)

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