What Is an Amazon Reserved Instance?

Major cloud providers offer customers ways to realize significant cost savings by committing to a specific level of consumption. Amazon Web Services calls this concept Amazon Reserved Instances (RIs) and provides them as an alternative to standard On-Demand instance pricing. RIs are a reservation of resources and capacity—not a physical instance type—and manifest as a billing discount or coupon applied against On-Demand instance use in an AWS account. RIs exist for EC2, databases, and CDNs.

Reserved Instance Basics

  • RIs can be made for a one- or three-year term for a specified Availability Zone within a region
  • A reservation is paid as a single commitment at a significantly-reduced hourly rate over On-Demand pricing
  • Over 2,000 types of Amazon Reserved Instances exist, each with a unique break even point
  • Reservations are made to reserve capacity in a chosen Availability Zone
  • Making a reservation in a chosen Availability Zone puts you at the head of the line when capacity is needed

Reserved Instance Purchasing Strategies Require Optimization

Unfortunately, because each RI type is somewhat unique with its own break even point, an optimized strategy for Reserved Instance purchasing is critical. Without a real strategy (one that best comes from machine-generated analysis) any savings made by committing up front can easily be erased in practice.

Read the Definitive Guide to Maximizing Your Reserved Instances

Other Public Cloud Service Providers

Microsoft uses the term Azure Reserved VM Instances (Azure RIs) and Google Cloud uses a similar concept called committed use discounts.