Quickly Understand Amazon ElasticCompute 2 Instances On-Demand/Spot/Reserved

Amazon EC2 Instance Purchasing Options 

Amazon EC2 provides three different purchasing models that gives you the flexibility to optimize your costs.

  • Amazon EC2 Reserved Instances

Reserved Instance is just a pricing feature.You agree to purchase your instance for a particular term which may be 1,2 or 3 years.On purchasing you have to pay one time upfront price.

The hourly charges are greatly reduced. Remember its a pricing feature , on purchasing a reserved instance,a instance is not launched but amazon matches the details of your reserved purchase with that of your running on-demand instances,and the pricing of that on-demand instance (which matches to the reserve purchase) will change.It matches Platform,Instance Type and Availability Zone. If a situation arises where you have 2 or more on-demand instances running with same values for Platform,Instance Type and Availability Zone. The reserve pricing will apply to the longest running instance of all.

Reserved Instance

Read Here : How to Purchase Reserved Instance

  • Amazon EC2 Spot Instances

There are unused spare amazon instances,which amazon sells for low prices. These are Spot instances for which you have to give a maximum price you are willing to pay per hour from the current spot price. Its like simple bidding process, bid for the instance and use the instance till its spot price is equal to your bidding price. Once the spot price is surpassed from your maximum price,your instance is terminated with/without any prior warning. Here, you cannot stop a spot instance,either reboot or terminate. Look for pricing history of the instance before launching a spot instance.


  • Amazon EC2 On-Demand Instances

These are simple instances, which you can launch,stop,terminate,reboot any time you want. Just pay for the hours you use with no commitment.These are the costliest among the 3 instance types.

Further Reading - http://aws.amazon.com/ec2/purchasing-options/