AWS Savings Plans Guide 2023

| Author , tagged in aws cost optimization
Cloudticity, L.L.C.

Cloud platforms such as AWS offer companies in the healthcare space a number of important cost advantages. 

  • Switch CapEx for OpEx: If you’re going to build your infrastructure on-prem you can expect to make large, upfront capital expenditures–and you might end up building a system that is too small or large for your evolving needs. With the cloud, these difficulties go away, replaced with operational expenditures paid to access remote resources as needed.

  • Dynamic flexibility: A related point is that cloud platforms give you the ability to dramatically increase or decrease the resources you’re using. You could shut half your clusters off in a few hours if they’re no longer needed, or spin up a bunch of new ones for an innovative machine-learning application you’re working on. 

  • Predictable billing: With the cloud, you pay monthly for the services you use. You have a clear view of where your money is going and for what purposes, allowing you to monitor the return on different projects and adjust your spending accordingly. 

Nevertheless, the advantages of the cloud’s spending model don’t rule out the possibility that cloud costs can escalate quickly. Many companies pay more for more cloud resources than they should.

There are a few ways of effectively managing your spending on cloud resources. When paired with healthcare-specific cloud expertise, these techniques can help you dramatically reduce your total spending without diminishing the myriad benefits the cloud offers your business.

One especially promising strategy is by using AWS Savings Plans. Let’s look into what AWS savings plans are, how they work, and how they can help you leverage cloud resources without breaking the bank.  

What are AWS Savings Plans?

An AWS savings plan is a flexible pricing model which allows you to take advantage of discounted prices on standard on-demand instances if you’re willing to commit to a 1-year or 3-year contract. 

Suppose, for example, that you set up an AWS savings plan for an m5.24 xlarge Windows machine at a rate of $7.80 an hour for a year. You’ll pay the discounted $7.80 for every hour you use that machine for a full 12 months, and any additional time used is charged at the standard on-demand rate. 

Though the specifics can vary depending on the situation, the savings of an AWS savings plan can be substantial–as much as 60 or 70% off regular prices. This makes it an obvious choice for any enterprise wanting to keep spending under control. 

What Are The Different Types of AWS Savings Plans?

Not all savings plans are equal, and AWS offers a few options. The three major categories of AWS savings plans are:

  • EC2 Savings Plans 
  • Compute Savings Plans
  • Amazon SageMaker Savings Plans 

Let’s examine each of these in detail so you can see how they work. 

What is an EC2 Savings Plan?

An EC2 savings plan offers discounted prices for instances of Amazon’s Elastic Compute Cloud (EC2). Of all three AWS savings plans, this one’s 72% discount is the biggest one you can get.

The EC2 savings plan also affords a great deal of flexibility. Unlike with reserved instances, you can change the operating system and instance size, and if you spend a little extra for a dedicated tenant, you can get whatever licensing, performance specifications, or security configurations your application requires.

There are certain limitations to an EC2 savings plan, however. Part of the commitment you make involves confining yourself to a particular instance family in a particular region. This means that you can switch from a c5.xlarge to a c5.2xlarge and you can switch from Linux to Windows, but you can’t go from a c5 to an M5 and you can’t switch to a different region.  

What is an AWS Compute Savings Plan?

If these constraints still feel like too much, you can also opt for the more flexible AWS compute savings plan. While the 66% discount isn’t quite as big as the one you can expect from an EC2 savings plan, there are far fewer restrictions. 

With a compute savings plan, there’s no issue in switching between regions, instance types, or even services. This means that you have the option of reserving extra compute capacity to put toward future projects while still reducing your total bill.

What is a SageMaker Savings Plan?

For healthcare companies that plan on using machine learning, a SageMaker savings plan is worth investigating. These plans cover a wide variety of instance types, and are suitable for workflows involving processing data or batch transformations, training models, and performing inference. Though the 64% discount isn’t as high as the discount for an EC2 savings plan or a compute savings plan, it’s still substantial. 

How Much Does an AWS Savings Plan Cost?

The ultimate cost of an AWS savings plan will depend on the specifics of your situation, and will turn on details such as the instance type you’re using, the operating system you’re running, and your preferred payment method. 

It’s worth briefly running through three types of payment methods, as these will have a big impact on how much your AWS savings plan ultimately costs you:

  • Full up-front payment: Naturally, if you pay for the full plan at the beginning Amazon will charge you less for it. Though this carries obvious risks, it’s a good option if you have a thorough understanding of your future projects’ requirements and can confidently budget ahead.
  • Partial up-front payment: This payment plan involves paying for 50% of your plan’s commitment up-front, with the rest being handled on a month-by-month basis. This would be most suitable if you have only a fuzzy idea of the resources you’ll need in the future. 
  • Month-by-month payment: If you need the greatest possible flexibility, you can also pay for an AWS savings plan in monthly installments, with no up-front expenditures at all. This would be the riskiest plan from Amazon’s perspective, and will therefore cost you the most in the long run. 

What Are The Benefits of an AWS Savings Plan?

There are myriad benefits of using an AWS savings plan, but by far the biggest are flexibility, reduced expenditures, and the ability to automate. 

First, they offer flexibility with respect to the compute resources you can access. With a compute savings plan you can use any kind of EC2 instance without worrying about details like region or operating system. Though EC2 instance savings plans do have more restrictions than compute savings plans, they still offer a lot of optionality for configuring systems to fit your specific use cases. 

Second, there’s the savings. As their name implies, AWS savings plans are pricing models which allow you to save on your total spend. EC2 savings plans offer up to a 72% discount, compute savings plans offer up to a 66% discount, and SageMaker savings plans offer up to a 64% discount, all of which could result in substantial reductions in your AWS spend. 

Though the final bill will depend on whether you fully pay for the plan upfront, partially pay for it upfront, or pay for it on a month-by-month basis, you’ll still enjoy a discount as long as you’re willing to commit to a contract of either 1 year or 3 years. 

Finally, AWS savings plans support a great deal of automation, which in turn reduces the amount of time you need to spend debugging your code and overseeing resource deployment. All AWS savings plans apply usage automatically, for example, even when you make changes to the underlying infrastructure. 

Can AWS Savings Plans Be Queued? 

Another way in which AWS savings plans can reduce the need for time-consuming resource management is through queueing. Amazon rolled out support for plan queueing in 2020, and what it allows you to do is purchase a savings plan and set a future date at which the plan becomes operative. 

A simple way this will make your life easier is by allowing you to renew your savings plan in advance, before they expire. This will reduce the likelihood that you get a nasty surprise in the form of a bill that’s higher than expected. What’s more, you can better scope out future work by purchasing a savings plan and having it activate later, when your projects begin ramping up. 

FAQs About AWS Savings Plans

AWS savings plans offer a great way of saving money on cloud compute while giving you ways of flexibly scaling up or down as required. In this section, we’ll walk through some common questions you might have about AWS savings plans. 

Where do I buy Savings Plans in AWS?

You can buy an AWS savings plan on the dedicated “purchase savings” page, in the billing and cost management console, or from the recommendations page. 

Can I change my Savings Plan?

No. You can buy more savings plans whenever you want, but during your contract period you can’t change or upgrade your existing savings plan. 

Do AWS Savings Plans apply to Spot Instances?

No. AWS savings plans can’t be used for spot instances or reserved instances.

Do AWS Savings Plans apply to Amazon RDS?

As of today, there are no savings plans for Amazon’s Relational Database Services (RDS). 

Are AWS Savings Plans region-specific?

It depends. Compute savings plans work in any region, while EC2 savings plans apply only to particular regions. 

Can I cancel AWS Savings Plans?

In order to activate an AWS savings plan you have to commit to a contract lasting either 1 year or 3 years. During that time, you can’t cancel a savings plan. You can choose not to renew a given plan after it expires, and plans also expire when there is no more usage left. 

If you have queued a savings plan that will activate later, you can cancel that before it becomes active. 

Maximize Your Cloud Savings with Cloudticity

The cloud has revolutionized technology work in a variety of different industries, making it easier to scale cheaply and quickly while using cutting-edge services like SageMaker. But for all its advantages it can still be expensive, especially if you’re unaware of the myriad options available for reducing your bills.

AWS savings plans are one way of accomplishing this. But there are many other things you can do to reduce your AWS bill and optimize AWS costs. Want to learn more about cost optimization in AWS? Download the white paper, "Reduce Your AWS Cloud Spending" for six things you can do to cut cloud costs today.

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