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Tuesday, 5 March 2013

AWS Reduces EC2 RIs an Average of 11%

Will RDS Price Reduction Follow?

Today, AWS reduced the price of its EC2 Reserved Instances. This applies to Standard (m1), Second Generation (m3), High-Memory (m2) and High-CPU (c1) instances. Cluster compute instances have not been reduced (cg1, cc2, hi1, cr1 and hs1). These prices only apply for users who purchase new Reserved Instances; old RI purchases are still on the old higher prices.

With these changes, AWS notes that on average RIs provide a savings of 65% from on-demand prices, so it’s even more important to make sure you are using Reserved Instances where appropriate. Check out our previous blog: Reserved Instances vs On-Demand: Breakeven point and use - our free tool to help you assess costs of using the cloud.

Here is a summary of the Reserved Instance price reductions:

Average % Reduction in Reserved Instances

Interesting Observations:
This triggered me to look at AWS’ past price changes when it comes to Reserved Instances and see if we can identify and trends. First, it is interesting to note that this reduction averaged around 11%. In comparison, Reserved Instance prices were reduced once during 2012 (AWS: release notes) by around 26.67% across instance types and regions.

Second, the price reductions are not even across the entire AWS portfolio. For example, if we look at regions, reductions were higher in the US East, US West and EU regions. The lowest reduction was in the AWS GovCloud with only a 4.4% reduction. In addition, the price reductions were much higher on High-Memory (m2) instances averaging out at around 22% price reduction. As a result, the RI discount is now much higher for the m2 instances. In the example below, we examined the RI discount for xlarge instances and found that m2 instances average 56%, while the other instance families are in the 32-38% discount range. AWS is obviously creating a higher incentive for users to move to RIs for High-Memory (m2) type instances.

1 year % Saving from On-Demand

Lastly, during 2012’s price reduction, RDS Reserved Instances were also reduced, as opposed to today’s EC2 only reduction. Perhaps there is going to be a reduction in the RDS Reserved Instances prices coming soon! Follow us on Twitter and I will keep you posted!

-- Hassan Hosseini
Product Manager at PlanForCloud


  1. Amazon operate a high volume low margin model, and they look at each instance type in each area, RDS has different costs (same for different regions) that just running the hardware under neither so we might or might not see a reduction in RDS. I suspect there are some very complicated maths being done and a lot of data being crunched in order to make the determination on whether they can reduce prices or not

    1. Agreed, it might be interesting for you to know that in the PlanForCloud database, there are over 10,000 price points!