Reserved Instances vs Savings Plans

Which one actually saves you more money?

Up to 72%

Maximum Discount

1 or 3 Year

Commitment Terms

Flexibility

Key Difference

You know you should commit to Reserved Instances or Savings Plans to save money on AWS. But which one? The naming is confusing, the pricing pages are a maze, and making the wrong choice could lock you into something you don't need.

Let's cut through the confusion with real numbers and clear guidance.

TL;DR - Quick Decision Guide

Most People Should Choose

Compute Savings Plans

Maximum flexibility, applies to EC2 + Lambda + Fargate, easy to manage

For Stable, Specific Workloads

EC2 Reserved Instances

Slightly higher discount, but locked to specific instance type + region

For Databases

RDS Reserved Instances

Savings Plans don't cover RDS—you need RDS RIs for database discounts

Why Is This So Confusing?

AWS has multiple overlapping commitment options, each with different rules:

Option	Covers	Max Discount	Flexibility
EC2 Reserved Instances	EC2 only	Up to 72%	Low
EC2 Instance Savings Plans	EC2 only	Up to 72%	Medium
Compute Savings Plans	EC2 + Lambda + Fargate	Up to 66%	High
RDS Reserved Instances	RDS only	Up to 69%	Low
SageMaker Savings Plans	SageMaker only	Up to 64%	Medium

Key Insight

The discount difference between Reserved Instances and Compute Savings Plans is typically only 4-6%. For most organizations, the flexibility of Savings Plans is worth more than those extra percentage points.

Reserved Instances Explained

How Reserved Instances Work

You commit to a specific instance type in a specific region for 1 or 3 years. In exchange, you get a significant discount on the hourly rate.

Standard RI

Up to 72% off

• Fixed instance type
• Fixed region
• Can sell on marketplace

Convertible RI

Up to 66% off

• Can change instance type
• Can change region
• Cannot sell

Payment Options

All Upfront: Best discount
Partial Upfront: Middle ground
No Upfront: Lowest discount

The Catch with Reserved Instances

• If you stop using that instance type, you still pay
• If you migrate to a different region, the RI doesn't apply
• If you move to containers or serverless, the RI is wasted
• Managing multiple RIs across accounts is complex

Savings Plans Explained

How Savings Plans Work

You commit to a specific dollar amount of compute usage per hour (e.g., $10/hour). AWS automatically applies the discount to your usage, regardless of instance type, region, or even service (for Compute Savings Plans).

Compute Savings Plans

Up to 66% off

✓ Any EC2 instance family, size, or region
✓ Applies to AWS Lambda
✓ Applies to AWS Fargate (ECS/EKS)
✓ Automatically finds the best savings

EC2 Instance Savings Plans

Up to 72% off

✓ Locked to instance family (e.g., m5)
✓ Locked to region
✓ Can change size within family
✓ Slightly higher discount than Compute SP

Why Savings Plans Are Usually Better

• One commitment covers multiple services (EC2, Lambda, Fargate)
• No need to match specific instance types
• Automatically applies to your highest-cost usage first
• Simpler to manage than multiple RIs
• Future-proof: works even if you adopt new instance types

Real Math: Head-to-Head Comparison

Scenario: $10,000/month EC2 spend in us-east-1

Option	1-Year Term	3-Year Term	Flexibility
On-Demand (No Commitment) Baseline for comparison	$120,000/year No discount	$360,000/3 years	Maximum
Standard Reserved Instances All Upfront, specific m5.xlarge	$78,000/year Save $42,000 (35%)	$180,000/3 years Save $180,000 (50%)	Low
Convertible Reserved Instances All Upfront, can change instance type	$84,000/year Save $36,000 (30%)	$205,200/3 years Save $154,800 (43%)	Medium
Compute Savings Plans All Upfront, any instance/region	$81,600/year Save $38,400 (32%)	$194,400/3 years Save $165,600 (46%)	High
EC2 Instance Savings Plans All Upfront, m5 family in us-east-1	$79,200/year Save $40,800 (34%)	$187,200/3 years Save $172,800 (48%)	Medium

Key Takeaway

The difference between Standard RIs (50% discount) and Compute Savings Plans (46% discount) on a 3-year term is only $14,400 over 3 years ($400/month). But if you need to change instance types, regions, or move to containers, the RI savings evaporate while the Savings Plan keeps working.

Recommendation: Compute Savings Plans for most organizations

Decision Framework: Which Should You Choose?

Choose Compute Savings Plans if...

✓ You might change instance types in the next 1-3 years
✓ You use multiple services (EC2, Lambda, Fargate)
✓ You operate in multiple regions or might expand
✓ You want simple, automatic discount application
✓ You're adopting containerization or serverless

Choose Reserved Instances if...

✓ You have very stable, predictable workloads
✓ You're 100% certain of your instance type for 3 years
✓ You want the absolute maximum discount
✓ You want to sell unused capacity on the marketplace

For RDS: Choose Reserved Instances

! Savings Plans don't cover RDS, ElastiCache, Redshift, or OpenSearch
! You must use service-specific Reserved Instances for databases
✓ RDS RIs can save up to 69% on database costs

Best Practices for Commitments

Do's

Start small: Commit to 60-70% of your baseline first
Analyze first: Use Cost Explorer recommendations
Review quarterly: Adjust commitments based on actual usage
Layer commitments: Combine different term lengths

Don'ts

Over-commit: Don't commit to 100% of current usage
Ignore flexibility: Don't chase max discount at all costs
Set and forget: Monitor utilization regularly
Commit before optimizing: Right-size first, then commit

Not Sure How Much to Commit?

Our free AWS Cost Analyzer shows your usage patterns and helps you understand your baseline before making any commitments.

Analyze My Usage Patterns Free

See your commitment opportunities before you buy

The Bottom Line

For most organizations, Compute Savings Plans offer the best balance of savings and flexibility. The 4-6% discount difference vs. Reserved Instances isn't worth the lock-in risk. Start with 60-70% of your baseline usage, and you'll capture most of the savings while leaving room for change.

30-50%

Typical savings

60-70%

Recommended commitment level

Compute SP

Best choice for most