AWS Bends on Upfront Reserved Instances Payments
Amazon Web Services (AWS) Inc. this week introduced two new payment options for its EC2 Reserved Instances service.
AWS first launched Reserved Instances in 2009 as a way for users to lock down guaranteed EC2 capacity for one- or three-year periods. AWS originally required users to pay upfront for those reserved instances; prices started at $325 for a one-year term and $500 for a three-year term, with higher prices for users requesting greater capacity.
In exchange for paying upfront, users were guaranteed a certain level of compute capacity available to them at all times for the length of their term, and at a lower per-hour price than on-demand EC2 instances.
On Tuesday, AWS announced that in addition to the 100-percent upfront option, it is now giving users the choice to pay either the entirety or a portion of the cost of their Reserved Instances in installments.
The new "Partial Upfront" payment option lets users pay only for part of the full cost at the outset, and then spread out the rest of the payments over the duration of their one- or three-year term. The "No Upfront" option lets users pay in installments over the duration of their one-year term (this option is not available for three-year terms).
Broken down to hourly rates, both new options still cost less than buying instances on-demand . However, their cost savings are smaller compared to paying everything upfront. A detailed breakdown of pricing under the new structure is available here.
AWS evangelist Jeff Barr wrote in a blog post that the company implemented the new pricing options after "[a]fter combining customer feedback with an analysis of purchasing patterns that goes back to when we first launched Reserved Instances in 2009."
Gladys Rama is the senior site producer for Redmondmag.com, RCPmag.com and MCPmag.com.