What Amazon EC2 Pricing is right for you? (Don’t be fooled)

Amazon offers different ways of paying for the same thing.
Let’s suppose you want a m1.large ec2 instance, which gives you 7.5GB of memory, 2 compute units, yada yada yada…

You: Ok, how much does it cost?
Me: Well, it depends on how long you need it for.
You: Ok, let’s say I need it running continuously for 200 days. How much does it cost?
Me: It still depends.
You: on what?

You can launch your m1.large EC2 instance and Amazon will happily charge you $0.240/hr. In 200 days, that will cost you $1,152. (This is their On-Demand pricing.)

But you could also purchase a Reserved Instance license.
There are 3 types:

  • Light Utilization, with an upfront cost of $243 plus $0.136/hr
  • Medium Utilization, with an upfront cost of $554 plus $0.084/hr
  • Heavy Utilization, with an upfront cost of $676 plus $0.056/hr

If you went with Light utilization, you’d end up paying about $896.
If you went with Medium utilization, you’d end up paying about $957.
If you went with Heavy utilization, you’d end up paying about $945.

Clearly, Light Utilization is the way the go.

Well, no one can really know exactly how many days or hours they’ll run a server. So you approximate. But you may still like to know when it makes sense to get On-Demand vs Light Reserved vs Medium Reserved vs Heavy Reserved.

So what I did was plot out the lines of the 4 pricing models on a graph. An online graphing tool can be found here.

Here’s an example of the m1.large pricing model.
m1.large
The x-axis is the number of hours of ec2 usage. The y-axis is the cost.
The red line represents the On-Demand pricing. The green line represents the High Reserved Instance pricing. The blue line represents the Medium Reserved Instance pricing. The yellow line represents the Light Reserved Instance pricing.

The idea is that you want to pick the line that is closer to the bottom. The intersections of the lines tell you the break-even points for the various plans. Ie. it tells you when one pricing plan becomes cheaper than another after X hrs of usage.

For example, The red line (on-demand) and yellow line (light reserved) intersect first, at about 2730 hrs and $614. If you plan to use less hours than this, pick on-demand. If you plan to use more, pre-purchase a light reserved instance.

If you follow the yellow line, eventually it intersects with the green line (heavy reserved). If you plan to use more hours than this (5412hrs), you should pre-purchase a heavy reserved instance.

*One thing to note is that the blue line (medium reserved) is never the lowest line on the graph for m1.large instances. So it doesn’t matter how long you plan to use this machine, it NEVER makes sense to pre-purchase the medium reserved instance.
Don’t let Amazon fool you with too many options!!!

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