Amazon EC2 pricing you need to know

This option is the best known, namely On-Demand. You only pay while the instance is running--either hourly or per second--depending on the type of instance and the operating system you choose.

On-Demand is ideal for short-term deployments, application development and testing, and unpredictable and interrupted workloads. In addition, this pricing model is also commonly used for those just starting out, testing workloads, just experimenting, or getting a basic average usage instance.

There is no need for a contract, long-term commitment, prepayment, or prior communication with AWS to use this billing option.

Savings Plans allow you to reduce compute costs by committing to a consistent dollar-per-hour spent and compute usage for a period of 1 or 3 years. Any usage beyond that will be subject to the usual On-Demand rate.

Therefore, this pricing model can provide savings of up to 72% on your AWS compute usage regardless of instance family, size, OS, tenancy, or AWS region.

This model also applies to using AWS Fargate and AWS Lambda which are serverless compute options. if you are considering the Savings Plans option, AWS Cost Explorer can analyze your Amazon EC2 usage for the last 7, 30, or 60 days. AWS Cost Explorer also provides customized recommendations for Savings Plans.

These recommendations can estimate how much you can save on monthly costs based on your previous use of Amazon EC2 and the number of commitments per hour in 1 or 3 years.

Reserved Instances offer billing discounts applied to On-Demand instances by committing to a usage level for a period of 1 or 3 years.

There are several options available: Standard Reserved and Convertible Reserved Instances for 1 or 3 year terms. And also available Scheduled Reserved Instance (Scheduled Reserved Instance) for a period of 1 year only.

This option is suitable for workloads with stable or predictable conditions. Reserved Instances offer up to 75% discount compared to On-Demand options. When the Reserved Instance expires, you can continue to use the Amazon EC2 instance without interruption. However, the On-Demand rate will be charged until you terminate it or purchase a new Reserved Instance that matches the instance attributes (instance type, region, tenancy, and platform).

Spot Instances use unused Amazon EC2 compute capacity and offer cost savings of up to 90% on On-Demand prices. This option is ideal for workloads with flexible start and end times and no problem with interruptions.

If you apply for Spot Instances and Amazon EC2 capacity is available, the instance will be launched. Otherwise, the request will fail until capacity is available again.

Once you launch Spot Instances, AWS can reclaim those instances whenever they need them. AWS will provide a two-minute advance warning time for you to complete the job. You can always continue later if you need to. So, when selecting this option, make sure your workload can accept interrupts.

Dedicated Hosts are physical servers of the capacity of Amazon EC2 instances that are fully dedicated for your use. This option is usually used to meet certain compliance requirements and no one else will share the lease on the physical server. In this option you can use your existing per-socket, per-core, or per-VM software licenses to help maintain server-bound license terms.