They don’t call it options, They call it “Reserved Instances”. Let’s look at the details first.. then I’ll run some numbers.

Reserved Instances give you the option to make a low, one-time payment for each instance you want to reserve and in turn receive a significant discount on the hourly usage charge for that instance. After the one-time payment for an instance, that instance is reserved for you, and you have no further obligation; you may choose to run that instance for the discounted usage rate for the duration of your term, or when you do not use the instance, you will not pay usage charges on it.

Linux/UNIX One-time Fee   Standard Reserved Instances 1 yr Term 3 yr Term Usage Small (Default) $325 $500 $0.03 per hour Large $1300 $2000 $0.12 per hour Extra Large $2600 $4000 $0.24 per hour High CPU Reserved Instances 1 yr Term 3 yr Term Usage Medium $650 $1000 $0.06 per hour Extra Large $2600 $4000 $0.24 per hour

Reserved Instances can be purchased for 1 or 3 year terms, and the one-time fee per instance is non-refundable. Usage pricing is per instance-hour consumed. Instance-hours are billed for the time that instances are in a running state; if you do not run the instance in an hour, there is zero usage charge. Partial instance-hours consumed are billed as full hours. 

Reserved Instances are currently available for Linux/UNIX operating systems. We expect reserved Instances to be available for the EU region in the near future. Click here to see FAQs on using Reserved Instances.

As you can see the cents/hour figures have dropped a lot! How does that work if you factor in 1 or 3 years of “reservation” money?

For a small instance, a 1 year term is $325, so that’s $325/365/24 = $0.03710 per hr. Let’s add that up. You can now get a small instance for $0.0671 per hr instead of $0.10. That’s a savings of 0.0329 per hour, or $288.20 per year! If you bought into 3 years, $0.049 per instance per hour and $446.76 saved per year! That’ll pay a pretty nice sized Amazon S3 bill!

As they say, the savings scale with the instance size! To summarize;

Standard Linux/Unix

1 year	3 years
Small – $0.0671 per hr, $288.20 savings per year	$0.049 per hour, $446.76 savings per year
Large – $0.2684 per hr, $1152.80 savings per year	$0.1961 per hour, $1786.13 savings per year
XLarge – $0.5368 per hr, $2305.60 savings per year	$0.3922 per hour, $3572.27 savings per year

High CPU

1 year	3 years
Medium – $0.1342 per hr, $576.40 savings per year	$0.09805 per hour, $893.07 savings per year
XLarge – $0.5368 per hr, $2305.60 savings per year	$0.3922 per hour, $3572.27 savings per year

 

If you run several instances all the time, this is a huge win! If you buy into 3 years, the savings is about 50%!

Nice work, Amazon!