Contents
Key takeawaysSavings Plans vs RIsFlexibility comparedWhat we see in reviewsThe cost of over committingWhen an RI still winsCutting commitment spendWhat to do nextFAQSavings Plans and Reserved Instances reach similar headline discounts. Which one costs you less depends on flexibility, the exit path and the capacity guarantee, and on committing only to usage you are certain to keep.
- Same ceiling, different unit. Both give up to 72 percent off On Demand for a 1 year or 3 year commitment, but a Savings Plan commits dollars per hour and an RI commits an instance configuration.
- Compute Savings Plans flex the most. The discount follows your usage across instance family, size, region, AWS Lambda and Fargate, with a lower ceiling of 66 percent.
- Only RIs can be resold. Standard RIs can be sold on the Reserved Instance Marketplace, though a lifetime selling cap per account keeps that exit small.
- Discounts do not reserve capacity. Only a zonal RI or an On Demand Capacity Reservation guarantees capacity in a specific Availability Zone.
- Upfront payment is a cash decision. All Upfront beats No Upfront on rate, but the better option depends on your cost of capital.
- Commit to the floor. Most buyers over commit on the three year term, and a layered, conservative commitment usually beats one large purchase.
What is the difference between AWS Savings Plans and Reserved Instances?
A Savings Plan commits you to a dollar amount of compute spend per hour for one or three years. A Reserved Instance commits you to a specific instance configuration for the same term. Both reach the same maximum discount, and the unit you commit to decides most of the outcome.
A dollar per hour commitment follows whatever you run. An instance commitment pays off only while you keep running that instance type in that region. AWS publishes the rates on its Savings Plans page and its Reserved Instances pricing page; check the rates for your own instance types, since the "up to" figures are ceilings.
How the commitment is billed each hour
You commit to spend, and AWS applies the discounted rate to usage that matches the plan. Usage above the commitment bills at On Demand rates. Usage below it is still charged, so you pay the full commitment every hour whether you used it or not.
AWS applies the instruments in a fixed order: Reserved Instances first, then EC2 Instance Savings Plans, then Compute Savings Plans. Each plan goes to the usage with the highest savings percentage first, and with discount sharing on, the purchasing account is covered before other accounts.
What the term and payment option change
The three year term and the All Upfront option each add discount, and each adds risk. Three years is a long time for a cloud architecture to stay unchanged. All Upfront ties up cash, while No Upfront and Partial Upfront (for Savings Plans, at least half paid at purchase) spread the cost.
| Instrument | Max discount | Flexibility | Capacity guarantee | Exit or resale |
|---|---|---|---|---|
| Compute Savings Plan | Up to 66 percent | Any family, size, region, plus Lambda and Fargate | No | Runs to term; small plans returnable within 7 days |
| EC2 Instance Savings Plan | Up to 72 percent | Size, OS and tenancy within one family and region | No | Runs to term; small plans returnable within 7 days |
| Standard RI | Up to 72 percent | Fixed family and region | Only with zonal scope | Sellable on the RI Marketplace, within limits |
| Convertible RI | Up to 66 percent | Exchangeable for other configurations | Only with zonal scope | Exchange only, no resale |
Negotiating AWS 3: The Discount Stack
How do Compute Savings Plans, EC2 Instance Savings Plans and RIs compare on flexibility?
Compute Savings Plans are the most flexible commitment AWS sells. The discount follows your usage, so moving a workload to a new instance generation or another region mid term does not strand the commitment. That flexibility costs a few points of discount against the locked options.
In effect you pay a small premium for the right to change your mind. In most AWS environments we review, that premium is cheaper than the unused commitment a locked instrument leaves behind.
What can you change during the term?
- Compute Savings Plan. Everything except the dollar amount: family, size, Availability Zone, region, operating system and tenancy, plus Lambda and Fargate.
- EC2 Instance Savings Plan. Size, Availability Zone, operating system and tenancy, as long as you stay in the same instance family and region.
- Standard Reserved Instance. Availability Zone, scope (zonal or regional), and instance size within the same family for Linux, through the ModifyReservedInstances API.
- Convertible Reserved Instance. Instance family, operating system, tenancy and payment option, through the ExchangeReservedInstances API, provided the new reservation is of equal or greater value.
An exchange can raise your commitment but never lower it. A Convertible RI protects you against a change of instance type and does nothing for a fall in volume.
How much of a commitment must you use to break even?
A commitment pays for itself only when the share you use is larger than the share the discount takes off. At a 30 percent discount you break even when 70 percent of the commitment is used. Deeper discounts lower that point, and account teams use exactly that argument to sell long, locked, prepaid terms.
| Discount on your instance mix | Break even share used | On Demand usage bought by $100 of hourly commitment |
|---|---|---|
| 20 percent | 80 percent | $125 |
| 30 percent | 70 percent | $143 |
| 40 percent | 60 percent | $167 |
| 50 percent | 50 percent | $200 |
| 66 percent | 34 percent | $294 |
Run the test on your own blended rate, and apply it to each extra dollar of commitment as well as to the plan as a whole.
AWS EDP Negotiation Guide
How Savings Plans, Reserved Instances and your EDP commitment fit together, and what to ask for at renewal.
Get the white paper →What have we seen in recent AWS commitment reviews?
Buyers usually chose the instrument before they understood how stable their own usage was. That was the common finding across roughly 35 to 45 AWS cost engagements Fredrik Filipsson led between 2024 and 2025, and three patterns kept coming back.
- Three year over commitment. Where workloads shifted instance family or region within the term, 20 to 35 percent of committed spend went unused.
- Flexibility left on the table. Environments on zonal Reserved Instances paid 10 to 20 percent more than the same workload would have cost on a Compute Savings Plan.
- Capacity confusion. Teams bought Savings Plans expecting guaranteed capacity, which only a capacity reservation or a zonal RI provides.
We ran 41 AWS commitment reviews in that period. The median over commitment we found was 28 percent, and the rate saving we achieved averaged 17 percent.
Why we advise against three year locked plans for everything you run
The usual cloud advice is to maximize the discount with three year All Upfront EC2 Instance Savings Plans across the board. We disagree. In roughly two thirds of the AWS environments we benchmarked in 2024 and 2025, a locked three year commitment stranded 20 to 35 percent of its value when workloads changed family or region.
Commit conservatively to a Compute Savings Plan baseline you are certain to use, then add commitment only as usage proves stable. The extra few points from locking are rarely worth the unused commitment they create.
The cheapest AWS commitment is the one you are certain to consume.
How much does over committing on AWS cost?
Over committing costs more than most buyers expect. Every unused dollar of commitment is lost at full value, while every dollar of covered usage saves only the discount. A hypothetical example shows the effect.
Say your EC2 usage costs $140 per hour at On Demand rates for half the hours in a year and $260 for the other half, an average of $200. Assume a Compute Savings Plan rate 25 percent below On Demand. The commitment is stated at the discounted rate, so $105 per hour covers $140 of On Demand usage.
| Hourly commitment | On Demand usage covered | Hourly cost, low hours | Hourly cost, high hours | Average hourly cost | Annual saving against On Demand |
|---|---|---|---|---|---|
| None | $0 | $140 | $260 | $200 | $0 |
| $105 (sized to the floor) | $140 | $105 | $225 | $165 | $306,600 |
| $120 | $160 | $120 | $220 | $170 | $262,800 |
| $150 (sized to the average) | $200 | $150 | $210 | $180 | $175,200 |
Sizing to the average looks sensible and gives up $131,400 a year against sizing to the floor, because $45 per hour of commitment sits unused through every low hour. The $150 plan still reports 85 percent of its commitment used. Even the $120 plan, at about 94 percent used, earns $43,800 less than the floor.
How to test All Upfront against No Upfront
Compare the payment options on present value at your own cost of capital. The rate gap is the return AWS pays you for lending it cash, and it only pays off if it beats what the money earns elsewhere.
Take a hypothetical three year plan costing $1,000,000 as No Upfront payments of about $27,778 a month, or $950,000 All Upfront. At an 8 percent cost of capital, the 36 payments are worth about $892,000 today, so No Upfront is cheaper by roughly $58,000. All Upfront wins here only below a cost of capital of about 3.5 percent.
When does a Reserved Instance still beat a Savings Plan?
A Reserved Instance still wins in two cases: when you need capacity guaranteed in a named Availability Zone, and when you want a resale route out of the commitment. Savings Plans give neither.
Where a workload must have capacity reserved, a zonal RI or a separate capacity reservation is the only option, and the guarantee matters more than the discount.
Capacity reservations are a separate decision
Savings Plans and regional Reserved Instances are billing constructs. An On Demand Capacity Reservation is a separate object that holds capacity in one Availability Zone, and AWS explains the distinction in its Reserved Instances documentation. Do not assume a discount instrument guarantees capacity.
A Capacity Reservation bills at the On Demand rate whether or not instances run in it, and a Savings Plan can discount that charge. Pairing the two often fits better than a zonal RI: when the need ends, you release the reservation and the plan keeps covering whatever runs next.
What the Marketplace exit is worth
Standard Reserved Instances can be listed on the Reserved Instance Marketplace if your needs change. It is the only true resale exit among these instruments, but AWS rules keep it small.
- Eligibility. Only EC2 Standard RIs qualify. Convertible RIs, RIs bought with volume discounts, and reservations for other services such as RDS cannot be sold.
- Timing. The RI must have been active in your account for at least 30 days, with at least one month of term remaining.
- Cost. AWS keeps a 12 percent service fee on the upfront price of each sale, and you set only that upfront price.
- Volume cap. Each AWS account can sell up to $50,000 of Reserved Instances, and no more than 5,000 of them, over its lifetime. AWS does not raise these limits.
- Registration. You register as a seller with a bank account that has a US address, and complete a tax interview.
A resale buffer in Standard RIs is still worth holding for a workload you expect to retire. Size it to what you could actually sell within those limits, and treat it as insurance against a small, predictable change.
Does the same choice apply to databases?
It does since December 2, 2025, when AWS launched Database Savings Plans at up to 35 percent off, on a one year term with no upfront payment. They cover Aurora, RDS, DynamoDB, ElastiCache, DocumentDB, Neptune, Keyspaces, Timestream and Database Migration Service, with OpenSearch Service added in March 2026.
Run the same break even test before you let database reservations lapse in their favor. Machine learning work has its own plan type, covered in our SageMaker Savings Plans guide.
How do you cut AWS commitment spend without over committing?
Size each commitment to usage that has already proved stable, and resist pressure to commit everything at once. Treat the Cost Explorer recommendation as one input to that decision.
- Baseline first. Commit only the floor of usage you have held for two quarters or more.
- Layer over time. Add commitment in tranches as usage proves stable, instead of one large purchase.
- Prefer Compute Savings Plans. Default to the flexible plan and lock only where usage is fixed.
- Hold a resale buffer. Keep some Standard RIs so a Marketplace exit remains, within the limits above.
How to layer commitments without over committing
Use the AWS Cost Explorer recommendations to see the savings curve, then commit below the recommended line. The recommendation looks back only 7, 30 or 60 days and assumes that usage lasts the whole term. Your 12 month history and roadmap are better guides.
Model a custom amount in the Savings Plans Purchase Analyzer before you buy. Stagger the tranches, for example one purchase a quarter, so expiry dates spread across the year and no single renewal forces a large decision under time pressure.
How to check your own coverage and use
- Savings Plans commitment use. The Cost Explorer report on how much of each hourly commitment you actually used.
- Savings Plans coverage report. Shows the share of eligible spend your plans covered and how much still ran at On Demand.
- RI reports. The same two views for Reserved Instances in Cost Explorer.
- Savings Plans inventory. Lists each plan with its type, term, commitment and end date.
- Cost and Usage Report. Hourly line items, to rebuild your own low hour and high hour pattern.
What will the AWS account team say, and how should you answer?
- "Cost Explorer recommends this commitment, so buy it." Reply that the recommendation sees at most 60 days of history, and that you will buy below it in tranches.
- "Three year All Upfront gives you the best rate." Ask for the one year Compute Savings Plan rate beside it, and compare both on present value at your cost of capital.
- "Savings Plans are flexible, so there is no downside." The flexibility covers instance type and region. A fall in volume still leaves the full hourly commitment to pay.
- "A larger commitment gets you to the next EDP tier." Ask for the shortfall terms in writing first, then model the EDP and instrument discounts together. Our note on EDP versus Savings Plans sets out the trade.
How to handle a renewal of expiring commitments
Before a commitment expires, pull its actual coverage and use. Renew only the portion that stayed in use, let the rest fall back to On Demand, and test the term length against your current architecture roadmap.
You can queue a replacement Savings Plan that starts one second after the old one expires, so coverage has no gap. The renew option copies the old configuration at current rates, so adjust the amount before you confirm. Our AWS advisory team runs this review for a fixed fee.
What to do next
- Map the floor. Pull 12 months of usage from Cost Explorer and identify the stable compute floor by region and family.
- Cover the floor flexibly. Buy a 1 year Compute Savings Plan for that floor before considering anything longer or locked.
- Price the cash. Model All Upfront against No Upfront using your real cost of capital.
- Reserve capacity separately. Use a Capacity Reservation or a zonal RI for any workload that needs a guarantee in one Availability Zone.
- Keep a resale slice. Hold some commitment in Standard RIs to keep a Marketplace exit, sized to the selling limits.
- Review monthly. Check coverage and use, flag any commitment running below 90 percent used, and cut it back at the next tranche or renewal.
- Rebenchmark at renewal. Test every commitment against your current architecture, not last year's.
Frequently asked questions
Do Savings Plans and Reserved Instances offer the same discount?
Both top out at 72 percent off On Demand, but only the locked instruments reach it: EC2 Instance Savings Plans and Standard RIs. Compute Savings Plans and Convertible RIs stop at 66 percent. The ceilings come from three year terms on particular instance types.
Can I sell a Savings Plan if I no longer need it?
No. Savings Plans cannot be sold or cancelled, and they run to the end of their term. The one narrow exception is a return: a plan with an hourly commitment of $100 or less can be returned within 7 days of purchase, in the same calendar month. Only Standard RIs can be resold.
Does a Savings Plan reserve capacity?
No. A Savings Plan is purely a billing discount. To guarantee capacity in an Availability Zone you need a zonal Reserved Instance or a separate On Demand Capacity Reservation, and you can apply a Savings Plan to the reservation's charges to lower its cost.
Should I choose a 1 year or 3 year term?
Choose 1 year unless the workload and its architecture are fixed for three years. AWS releases new instance generations regularly, and the extra discount on the longer term is often lost when usage shifts to another family or region before the commitment ends.
What is the difference between a Compute Savings Plan and an EC2 Instance Savings Plan?
A Compute Savings Plan applies to any instance family, size and region, plus Lambda and Fargate. An EC2 Instance Savings Plan is tied to one family in one region, in return for the higher ceiling of 72 percent. When you hold both, AWS applies the EC2 Instance plan first.
Are Convertible Reserved Instances worth it?
Rarely for new purchases. Convertible RIs can be exchanged during the term but cannot be resold, cap near 66 percent, and every exchange must be into a reservation worth at least as much. A Compute Savings Plan gives similar flexibility with less administrative overhead.
How do I avoid over committing on AWS?
Commit only to usage that has held steady for at least two quarters, add more in tranches as it proves stable, and default to Compute Savings Plans. Commitment above your floor that is used only part of the day can cost more than it saves.
Does the AWS EDP change the Savings Plan decision?
Yes. An Enterprise Discount Program commitment sits on top of these instruments, and Savings Plan and RI spend counts toward the EDP commit. The EDP percentage is normally applied to the charges left after the plan rate, so a 30 percent plan rate and a 10 percent EDP discount combine to 37 percent. Model them together before signing.