Cloud Cost Management through Reserved Instance option

AWS, the pioneer of Cloud Platforms, has created three different pricing models which can suit an organization based on the life cycle stage they are in regard to Cloud usage. The first and most well-known model is the on-demand model under which resources are priced based on actual usage like hourly compute or storage, I/O capacity consumption etc. This pricing model is best suited when a company is not exactly sure of its usage pattern and is getting started on the Cloud Platform. Once the company is accustomed to the Cloud Platform and its benefits, it can upgrade to the next model -“Reserved instance”, to get 30-50% price reduction by committing the resource consumption for a one or three years’ time. The third model, “Spot Instances” is for buying resources to use only in periodic surges in resource demand.

While Reserved Instance Model for AWS EC2 is quite well known, AWS also provides the same pricing model for many other services as well. Let us look in-depth into 6 More AWS Services which can be consumed under Reserved Instance price model.

AWS RDS

After Computing Power, the most used resource is database. Databases are a very significant portion of an enterprise’s resource capacity and as it is often run 24/7. Hence adopting the Reserved Instance pricing model for RDS is a worthwhile investment. Amazon RDS Reserved Instances give you the option to reserve a DB instance for one or three year term and in turn receive a significant discount compared to the On-Demand Instance pricing for the DB instance.

It is important to note that RDS will be charged for every hour during the entire reservation term one selects, regardless of whether the database instance is running or not. There are two different factors that have to be considered while planning out Reserved Instances for RDS.

Commitment Term: AWS provides two types of commitment terms durations.

1-year term which is useful for production databases with predictable workloads

3-year term which is useful for stable production databases for long running applications

Payment Options: Once the commitment term is decided, there are 3 payment options to choose from, based on the percentage of upfront payment one is willing to pay.

No Upfront: In this model, no upfront payment is required at purchase. The discount is however lower when compared to other payment options. This is not applicable if the commitment term is 3 years.

Partial Upfront: In this model, a portion of the cost is paid upfront and the remaining hours in the term are billed at the established discounted hourly rate. This model strikes a right balance between upfront and hourly.

Full Upfront: In this model, the cost of the entire term is paid to get the best effective hourly price

AWS DynamoDB

Amazon DynamoDB is a fully managed NoSQL database service that provides fast and predictable performance with seamless scalability. When using DynamoDB, the pricing is a flat, hourly rate service based on how much capacity is provisioned. Like other services, DynamoDB Reserved Capacity also offers significant savings over the on-demand price of DynamoDB if the capacity is paid for in advance. One has to choose to commit a capacity model comprising of a fixed amount of Write Capacity and Read Capacity units. However, the cost is incurred even if the resource is not utilized.

Amazon CloudFront

Amazon CloudFront is the content delivery web service that helps businesses to distribute content to end users with low latency and high data transfer speeds. AWS CloudFront Reserved Capacity gives you the option to commit to a minimum monthly usage level for a year or longer to receive a significant discount. AWS CloudFront Reserved Capacity pricing metric is based on volume of data transfer. The pricing begins at a minimum of 10 TB of data transfer per month from a single region. If the users commit to higher volume usage, they are eligible for receiving additional discounts.

AWS ElastiCache

ElastiCache helps developers to set up, manage, and scale a distributed in-memory cache environment in the cloud. Developers can choose their cache engine to be either Memcached or Redis protocol-compliant. The key benefit of using AWS ElastiCache is that provides a high-performance, scalable and cost-effective caching solution, without the usual complexity of managing a distributed cache environment manually.

The reserved instance price model is almost same as that of AWS DynamoDB where Reserved nodes are charged an upfront fee that depends upon the node type and the reservation term years. In addition to the upfront charge there is an hourly usage charge

Elastic MapReduce

Amazon Elastic MapReduce is BigData Platform as a Service for large volume data analysis. AWS Elastic MapReduce is based on Apache Hadoop which distributes work across different virtual servers which are in clusters in AWS Cloud.

The Unique Reserved Instance Pricing Policy of AWS Elastic MapReduce are as follows:

An On-Demand Instance should be specified in the cluster configuration that matches the Reserved Instance specification. The cluster should be launched within the same Availability Zone of the instance reservation

Amazon RedShift

Amazon Redshift is a fully managed, petabyte-scale data warehouse service in the cloud. Amazon Redshift On-Demand pricing has no upfront costs and has an on-demand pricing scheme where users pay an hourly rate based on the type and number of nodes in the cluster. Users can save up to 75% over On-Demand rates by committing to a Reserved Instance for a fixed term ranging from 1 year to 3 years.

Your Cloud Strategy is optimal only when Reserved Instances are leveraged well and wherever applicable. Botmetric can help you manage your Cloud from Cloud Perspective through proactive advices based on Best Practices. Take a Complete demo of Botmetric to benefit from its capabilities.