AWS instance Purchase Options | Overview.

An Overview of  AWS instance Purchase Options

Focus:

• Tailored for SRE, DevOps, Cloud, and DevSecOps Engineers

Breakdown:

• Intro,
• Link to aws instance pricing page,
• Instance purchasing options,
• Most Common Options,
• twtech use cases with reference to a Hotel.
• Insights.

Intro:

• AWS offers several instance purchasing options to help twtech optimize costs based on its workload's needs, flexibility requirements, and usage patterns. 
• Here's a breakdown of the main purchase options, along with why each is used and which is most commonly used:
• For more details and current pricing, visit the official Amazon EC2 pricing page

https://aws.amazon.com/ec2/pricing/

1. On-Demand Instances

Description:

• Pay for compute capacity by the hour or second (depending on the instance type) with no long-term commitment. 

Pay for what you use

Use Case:

• Short-term or unpredictable workloads.
• Dev/test environments.
• Applications that can't be interrupted.

Why Used:

• Maximum flexibility.
• No upfront payment.
• Easy to scale up/down.

Downside:

• Most expensive per hour.

NB:

• On-Demand Instances is twtech Most commonly used option for new, testing, or dynamic workloads (use and terminate).

2. Reserved Instances (RIs)

Description:

• Commit to using a specific instance type in a specific region for 1 or 3 years in exchange for a significant discount (up to 72%) compared to On-Demand pricing.

Types:

• Standard RIs – Deepest discounts, no flexibility.
• Convertible RIs – Slightly lower discount, but allows instance family changes.
• Scheduled RIs – Specific time windows.

Use Case:

• Predictable workloads (e.g., steady-state applications).
• Long-running services like databases or app servers.

Why Used:

• Cost savings over the long term.
• Suitable for consistent workloads.

3. Savings Plans

Description:

• Commit to a consistent amount of compute usage (measured in $/hr) over 1 or 3 years in exchange for a lower rate, like RIs, but with more flexibility.

Types:

• Compute Savings Plan – Most flexible (across instance families, regions, OS).
• EC2 Instance Savings Plan – Tied to instance family in one region.

Use Case:

• Customers needing RI-style discounts without rigid instance commitments.

Why Used:

• Combines flexibility and savings.
• Easier to manage than many RIs.

4. Spot Instances

Description:

• Bid on unused EC2 capacity at discounted rates (up to 90% off), but AWS can reclaim these instances with short notice (2 minutes). 

NB: 

EC2 Spot Instances is Not suitable for critical jobs or databases.

Use Case:

• Fault-tolerant, stateless, and flexible workloads.
• Big data processing, CI/CD, batch jobs.

Why Used:

• Very cost-effective for ephemeral, parallel, or retry-tolerant tasks.

Downside:

• Instances can be interrupted at any time.

5. Dedicated Hosts

Description:

• Physical EC2 servers dedicated for twtech use.

Use Case:

• Software that requires a physical server (e.g., BYOL - Bring Your Own License).
• Compliance or regulatory requirements.

Why Used:

• Full control over host.
• Address licensing or isolation needs.

6. Dedicated Instances

Description:

• Run in a VPC on hardware dedicated to a single customer, but AWS manages the host.

Use Case:

• Isolation without needing full control of the hardware.

7. Capacity Reservations

Description:

• Reserve capacity in a specific Availability Zone for future use.
• twtech is charged at,  On-Demand rate whether twtech is running the instances or not.
• twtech creates/cancel Capacity instances anytime.  
• There is no billing discount.
• Amazing for  short-term, uninterrupted workloads that needs to be in a specific AZ

Use Case:

• Mission-critical workloads that must launch without capacity risk.

Most Common Options:

• On-Demand Instances are the most frequently used overall, especially during initial development and testing phases due to their flexibility and ease of use.
• However, in cost-optimized production environments, Savings Plans and Reserved Instances dominate, especially for consistent workloads. twtech can buy and sell its Reserved Instance in the Marketplace.
• If twtech is running steady workloads, it ‘ll likely save most by using Savings Plans (Compute type for flexibility). 
• If twtech is doing high-throughput, batch-style jobs, Spot Instances will be incredibly efficient.

twtech-Insights:

Which instance purchasing option is most suitable for twtech & other  aws-users?

• twtech-usecases:  Replace Hotel with EC2-Instance.

 On demand:

•   Think of it as, twtech comes and lodge in the Hotel whenever it likes. twtech pays the full price.

 Reserved: 

• Think of it as, twtech plans ahead and if twtech plans to stay for a long time, twtech may get a good discount.

 Savings Plans:

•  Think of it as, twtech pays a certain amount per hour for certain period and stay in any room type.

 Spot instances: 

• Think of it as, the hotel allows twtech to bid for the empty rooms and the highest bidder keeps the rooms.
•  twtech can get kicked out of the room at any time if another client bits higher.

 Dedicated Hosts:

•  Think of it as, twtech books an entire building of the Hotel.

 Capacity Reservations:

•   Think of it as, twtech books a room for a period with full price even if twtech doesn’t stay in it the room.

NB:

• EC2 Spot Instances is Not suitable for critical jobs or databases.
• On-Demand Instances is twtech Most commonly used option for new, testing, or dynamic workloads (use and terminate).