Several new enhancements to AWS Reserved Instances (including convertible and regional RIs) can allow your organization to save substantially on EC2 spending while maximizing usage flexibility. In this session, we will provide an overview of some of these recent enhancements and explore how your teams can best take advantage of these. Learning Objectives: - Understand the new enhancements to Amazon EC2 Reserved Instances - Learn new ways to unlock cost savings using RIs

1. © 2017, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
Pranesh Ramalingam,
Senior Product Manager, EC2
March 28, 2017
Getting the Most Out of EC2 Reserved Instances:
More Flexibility and Lower Costs

2. - Reserved Instances Overview
- Types of RIs: Standard and Convertible
- Scope of RIs : Zonal and Regional
- New! Instance Size Flexibility on RIs
- Application of RIs to instance usage
Agenda

3. Overview of Reserved Instances

4. On-Demand
Pay for compute
capacity by the hour
with no long-term
commitments
For spiky workloads,
or to define needs
Reserved
Make a 1 or 3 Year
Commitment and
receive a significant
discount over on-
demand
For committed or
baseline utilization
Spot
Bid for unused capacity,
charged at a Spot Price
which fluctuates based
on supply and demand
For fault tolerant, time-
insensitive or transient
workloads
EC2 Purchasing Options

5. Reserved Instances Overview
What is a Reserved Instance (RI)?
• RIs provide you with a significant discount (up to 75%) compared to On-Demand
instance pricing when you commit to a particular instance family within a region. This
RI discount can then be applied across all of your accounts within your consolidated
billing family (which has now migrated to AWS Organizations).
• RIs can also provide you with a capacity reservation for either one or three years,
ensuring that you are always able to launch your instances when you want
• This capacity reservation only applies to the sub-account in which it is purchased. If
you buy an RI with a capacity reservation, we recommend buying RIs in the (sub-)
accounts where they are most needed. That way, you have the reservation and still
maximize the billing benefit across all accounts.

6. Reserved Instance Payment Options
The No Upfront option provides a discount compared to On-Demand (up to 55% off)
and does not require an upfront payment.
• Low hourly rate for the RI for every hour in the term regardless of usage
The Partial Upfront option balances the payments of an RI between upfront and
hourly and provides a higher discount (up to 76%) compared to the No Upfront
option.
• Lower hourly rate for every hour in the term regardless of usage
With the All Upfront option you benefit from the highest discount compared to On-
Demand (up to 77% off)
• Full upfront payment with no additional usage fees for the hours used via the RI during the term

7. Reserved Instance Volume Discounts
RI Volume Discounts are based on the total list value (non-discounted) for the active RIs you have
per region. Your total list value is the sum of all expected payments for an RI within the term,
including both upfront and recurring hourly payments.

8. Types of RIs

9. Standard Reserved Instances
• A Standard RI offers you the most amount of
discount when you commit to a 1 year or 3 year term
• 3 Year RIs offer a higher discount as compared to a
1 Year RI
• You can purchase a Standard RI by specifying the
instance type (e.g. m4.xlarge), OS (e.g. Windows),
Tenancy (e.g. Default) and AZ (optional)

10. Convertible Reserved Instances
With a Convertible RI, you can modify your existing
reservation across:
Instance families
Instance sizes
Operating Systems
Tenancy

11. Convertible Reserved Instances
With a Convertible RI you can:
Convert to a new instance family e.g. R3 to C3 to T2 to M4
Convert to a new instance price e.g. if AWS reduces the public rate of
your instances
Convert to a new operating system e.g. Windows to Linux
Convert to a new instance size

12. Convertible Reserved Instances
Contd…
Convert tenancy e.g. from Dedicated Instances to default
Convert to a different payment option e.g. No Upfront to
Partial Upfront

13. Convertible Reserved Instances: True-Up
• Exchanges of Convertible RIs require that the new configuration be
of equal or greater value than the remaining value of your existing
RIs
• If you are exchanging Convertible RIs to a cheaper instance type or
to take advantage of EC2 price cuts, you will be able to obtain
additional instances in order to maintain the same value of your
contract
• If the total value of the new configuration exceeds your existing RI
asset value, you may be required to pay the difference. This is
called the true-up charge

14. Am I Convertible?

15. Converting via the console

16. Converting via the console

17. Scope of RIs: Zonal and Regional RIs

18. Any RI (Standard or Convertible RI) that is purchased for a specific
AZ is known as a Zonal RI. Zonal RIs provide both a billing discount
and a capacity reservation in the AZ you specify (we need to know
the AZ so we know where to reserve capacity!), giving you additional
confidence in your ability to launch instances when you need them.
Zonal RI

19. • Any RI (Standard or Convertible) that is purchased for a particular
region is known as a Regional RI.
• Regional RIs do not offer a capacity reservation but provide
broader applicability of the RI’s discount rate and make it easier
to take advantage of the RI’s discounted rate.
• With regional RIs, your RI discount can by applied automatically
to any AZ (this is known as AZ flexibility) within a particular AWS
Region or to any instance size within an instance family (this is
known as instance size flexibility…more on this later).
Regional RI

20. • When an RI (Standard or Convertible) purchased for an AZ, it is called as
a Zonal RI and when the RI (Standard or Convertible) is purchased for a
region, these are called as Regional RIs.
• Regional RIs offer greater flexibility and make it easier for you to take
advantage of the RI’s discounted rate. This reduces management
overhead of trying to match the instance usage to the RI or purchasing
the right RI to match your instance.
• You can always modify between Regional and Zonal RIs depending on
whether you require a capacity reservation
• There is no price difference between Regional and Zonal RIs
Regional vs. Zonal RIs

21. • Value billing discount over
capacity reservation
• Broader applicability of RI
discounts
• Purchasing RIs in Payer
Account
Consider
Regional RIs
if…

22. Purchasing Regional RIs

23. Am I Regional?

24. Modifying to Regional

25. New! Instance Size Flexibility

26. Instance Size Flexibility
• As of March 2017, Linux/Unix Regional RIs with
default tenancy offer instance size flexibility in addition
to AZ flexibility
• EC2 uses the scale shown along side, to compare
different sizes within an instance family. In the case of
instance size flexibility on RIs, this scale is used to
apply the discounted rate of RIs to the normalized
usage of the instance family.
• Example: Let’s say you own an m4.xlarge Linux/UNIX
regional RI with default tenancy in US East (N.Virginia).
Then this RI’s discounted rate can automatically apply
to two m4.large instances in us-east-1a or half of an
m4.2xlarge instance in us-east-1b

27. Normalization Factor in the Console

28. Instance size flexibility in the CUR
Let’s say that you purchase a m4.xlarge Linux RI with default tenancy in us-east-1 and you
launch two m4.large Linux instances with default tenancy in the us-east-1a AZ. Since the RI
purchased provides instance size flexibility, it will apply to the usage of the two m4.large
instances.
lineItem/
LineItemType
lineItem/
ProductCode
lineItem/
UsageStartDate
lineItem/Usage
Type lineItem/Description
lineItem/
ResourceID
lineItem/
UsageAmount
lineItem/
NormalizationFactor
lineItem/
Normalized
UsageAmount
lineItem/
Unblended
Rate
lineItem/
UnblendedCos
t
reservation/
ReservationARN
reservation/
TotalReserved
Units
reservation/
TotalReserved
NormalizedUnits
RIFee AmazonEC2 2016-01-01T00:00:00Z HeavyUsage: m4.xlarge
USD 0.0618 hourly fee per
Linux/UNIX (Amazon VPC),
m4.xlarge instance 8 46
arn:aws:ec2:us-east-
1:572481847476:reserved-
instances/f8c204c1-dd48-43f1-
adb8-f38aa61e0dea 744 5952
Discounted Usage AmazonEC2 2016-01-01T00:00:00Z BoxUsage:m4.large
Linux/UNIX (Amazon VPC),
m4.xlarge reserved instance
applied i-1bd250bc 1 4 4 0 0
arn:aws:ec2:us-east-
1:572481847476:reserved-
instances/f8c204c1-dd48-43f1-
adb8-f38aa61e0dea
Discounted Usage AmazonEC2 2016-01-01T00:00:00Z BoxUsage:m4.large
Linux/UNIX (Amazon VPC),
m4.xlarge reserved instance
applied i-1df340ed 1 4 4 0 0
arn:aws:ec2:us-east-
1:572481847476:reserved-
instances/f8c204c1-dd48-43f1-
adb8-f38aa61e0dea

29. Instance size flexibility in the CUR
Let’s say you have two m4.large Linux RIs with default tenancy in us-east-1 and you
launch an m4.xlarge Linux instance with default tenancy in us-east-1a for an hour. Since
the RIs you purchased provide instance size flexibility, they will apply to the m4.xlarge
instance.
lineItem/
LineItemType
lineItem/
ProductCode
lineItem/
UsageStartDate
lineItem/Usage
Type lineItem/Description
lineItem/
ResourceID
lineItem/
UsageAmount
lineItem/
NormalizationFactor
lineItem/
Normalized
UsageAmount
lineItem/
Unblended
Rate
lineItem/
UnblendedCos
t
reservation/
ReservationARN
reservation/
TotalReserved
Units
reservation/
TotalReserved
NormalizedUnits
RIFee AmazonEC2 2016-01-01T00:00:00Z HeavyUsage: m4.large
USD 0.0309 hourly fee per
Linux/UNIX (Amazon VPC),
m4.large instance 4 23
arn:aws:ec2:us-east-
1:572481847476:reserved-
instances/f8c204c1-dd48-43f1-
adb8-f38aa61e0dea 744 2976
RIFee AmazonEC2 2016-01-01T00:00:00Z HeavyUsage: m4.large
USD 0.0309 hourly fee per
Linux/UNIX (Amazon VPC),
m4.large instance 4 23
arn:aws:ec2:us-east-
1:527398342324:reserved-
instances/d6f809c4-ff23-43f9-
adb8-f38cc61e9poe 744 2976
Discounted Usage AmazonEC2 2016-01-01T00:00:00Z BoxUsage:m4.xlarge
Linux/UNIX (Amazon VPC),
m4.large reserved instance
applied i-1bd250bc 0.5 8 4 0 0
arn:aws:ec2:us-east-
1:572481847476:reserved-
instances/f8c204c1-dd48-43f1-
adb8-f38aa61e0dea
Discounted Usage AmazonEC2 2016-01-01T00:00:00Z BoxUsage:m4.xlarge
Linux/UNIX (Amazon VPC),
m4.large reserved instance
applied i-1bd250bc 0.5 8 4 0 0
arn:aws:ec2:us-east-
1:527398342324:reserved-
instances/d6f809c4-ff23-43f9-
adb8-f38cc61e9poe

30. Application of RIs to instance usage

31. How RIs get applied
• Reserved Instances are automatically applied to running EC2 instances that
match the Reserved Instance attributes.
• Zonal RIs are applied before Regional RIs to achieve higher RI utilization
• RIs are applied to instances in the purchasing account, and any unused RIs
are applied to usage in other linked accounts
• In the case RIs that offer instance size flexibility, there is no instance size
affinity

32. Scenario 1
A customer has the following instances running:
• 4 x m3.large Linux, default tenancy instances in Availability Zone us-east-1a
• 2 x m4.xlarge Linux, default tenancy instances in Availability Zone us-east-1b
• 1 x c4.xlarge Linux, default tenancy instances in Availability Zone us-east-1c
The customer has the following RIs:
• 4 x m3.large Linux, default tenancy RIs in Availability Zone us-east-1a (zonal RI)
• 4 x m4.large Linux, default tenancy RIs in us-east-1 (regional RI)
• 1 x c4.large Linux, default tenancy RIs in us-east-1 (regional RI)
RI benefits are applied as follows:
• The 4 m3.large RIs in us-east-1a provide a capacity reservation and billing discount to the m3.large instances
running in the same AZ
• 4 m4.large RIs are regional, and provide AZ and instance size flexibility. Therefore they apply to the usage of the 2
m4.xlarge instances
• 1 c4.large RI is regional, and provides AZ and instance size flexibility. Given the normalization factor differences, the
c4.large RI applies to partial usage of c4.xlarge instance.

33. Scenario 2
A customer has the following instances:
Account A
1 x m4.xlarge Linux, default tenancy instances in Availability Zone us-east-1a
Account B
1 x m4.xlarge Linux, default tenancy instances in Availability Zone us-east-1b
The customer has the following RIs:
Account A
1 x m4.xlarge Linux, default tenancy RIs in us-east-1 (regional RI)
Account C
1 x m4.xlarge Linux, default tenancy RI in us-east-1a (zonal RI)
RI benefits are applied as follows
•The discount of the m4.xlarge zonal RI owned by account C is applied to the m4.xlarge usage in account A.
•The discount of the m4.xlarge regional RI owned by account A is applied to the m4.xlarge usage in account B.

34. Scenario 3
A customer has the following instances:
•2 x c4.xlarge Linux, default tenancy instances in Availability Zone us-east-1a
•1x c4.2xlarge Linux, default tenancy instances in Availability Zone us-east-1b
The customer has the following RIs:
• 1 x c4.2xlarge Linux, default tenancy RIs in us-east-1 (regional RI)
RI benefits are applied as follows
•The discount of the c4.2xlarge RI can apply to either the c4.2xlarge instance or the 2 c4.xlarge instance, depending on
which usage is detected first by the AWS billing system. There is no preference given to a particular instance size.

35. Summary
• Choosing the best RI type for your needs will allow you to maximize cost
savings for the degree of flexibility you need on your EC2 usage
• Standard RIs offer the deepest discount for steady-state workloads that you
are able to forecast usage for
• Convertible RIs allow you to modify your RIs across families, operating
systems, payment plans, and tenancies in exchange for a 3-year
commitment
• Zonal RIs offer a capacity reservation for the instance matching the RI
specification in the given AZ.
• Regional RIs offer you broader applicability of your RI discount. Regional
RIs offer AZ flexibility and instance size flexibility which makes it easier for
you to take advantage of your RI’s discount and reduces management
overhead.

36. Thank you!