3 Frequently Asked Questions About AWS Reserved Instances

By Rachel Dines

Frequently asked questions about AWS Reserved Instances

As you probably know by now, one of the fastest ways to shrink your AWS bill is to purchase EC2 Reserved Instances (RIs). However, some organizations find it hard to keep up with the changes to RIs and the nuances associated with purchasing and managing them. As someone who spends a lot of time talking about RIs with customers, I thought it would be helpful to put together a frequently asked questions guide to help clarify some of the finer points about RIs. If you first need a primer on what RIs are and how they function at a basic level, I suggest first giving our ebook on managing RIs a quick read, and then come back to this post.

Question: In what ways can I modify or exchange my Reserved Instances?

I'm often shocked at how few people take advantage of one of the key capabilities of Reserved Instances: the ability to make modifications (for Standard RIs) and exchanges (for Convertible RIs). You can think of this feature as investment protection: if your organization’s usage patterns change, you can also make modifications to RIs, at no cost. You can make modifications as often as every single hour, if you choose to.*

You can modify Standard RIs in several different ways:

  • Switching between Regional and an Availability Zone scope (more on that below).
  • Switch between Availability Zones to a specific zone within the same region (for AZ scoped RIs only).
  • Switching between Classic EC2 and Virtual Private Cloud.
  • Altering the instance size within the same family (For example, splitting an m4.xlarge Reservation into 2 m4.large Reservations, or the reverse: merging 2 m4.large Reservations into 1 m4.xlarge reservation.)

Convertible RIs are a new type of EC2 reservation that can be “exchanged” for another Convertible Reservation that is better suited to your workload requirements. You can exchange Convertibles in the following ways:

  • Exchange for a new Instance type (across families)
  • Exchange for a new operating system
  • Exchange for a different tenancy
  • Exchange for a different Instance size

When you exchange a Convertible Reservation, you effectively purchase a new Reservation  that has the same or greater cost than what you started with. The exchange will take into account the prorated value of your purchased Reservations. This means that a three year Convertible Reservation that cost $1500 at time of purchase will have $1000 in value at the end of the first year and $500 of value at the end of the second year (note: the actual prorating will be done down to the hour).

It’s important to note that Convertible Reservations cannot be exchanged across Regions.

You can make modifications and exchanges in the AWS console, via API, or with a Cloud Service Management partner.

*Who has the time for that? This is really only feasible if you use a Cloud Service Management solution with automation, like CloudHealth.

Question: What’s the difference between RIs with Availability Zone Scope and Regional Scope?

In late September, Amazon introduced a new feature to all EC2 Reservations called Scope. With this change, all Reservations can be scoped to either an Availability Zone or a Region (regardless of whether they are Standard or Convertible Reservations). By default, all existing Reservations are scoped to an Availability Zone. There is no price difference between Availability Zone and Regional RIs, but there are feature and benefit tradeoffs. A Regionally Scoped Reservation will apply cost benefits of that Reservation to any usage of this instance type within a Region.

Let’s walk through a quick example: I purchased an All Upfront Reservation for an m4.xlarge running Linux for us-east-1a with shared tenancy for my team. They usually run this Instance type in us-east-1, but sometimes they need to move it to a different AZ in the same Region. Unless I had automatic RI modifications set up with a platform such as CloudHealth, I would lose the cost benefits for the Reservation when the Instance type isn’t running in us-east-1a. However, if I modify this Reservation to be Regionally Scoped Region, the cost benefits will automatically be applied to all matching instances running in the Region, regardless of the Availability Zone.

There is one important caveat to Regionally Scoped RIs: they do not include a capacity reservation that guarantees you the right to run an instance of this type for the duration of the reservation in the associated AZ.

Here’s a quick comparison of when to use AZ compared to Regional Scope RIs:

A table comparing when to use Availability Zone Scoped RIs versus Regionally Scoped RIs

Question: How do RIs float across accounts?

One of the most powerful and useful attribute of RIs is their ability to “float” across linked accounts. Here’s what this means: if you purchase a Reservation in one account, but there is no Instance usage in a given hour in this account to utilize the Reservation, it’s applied to Instance usage in any other linked account within the consolidated bill. Note that to take advantage of “float”, you must have consolidated billing enabled, and the “float” is limited to the billing account and the corresponding linked accounts.

However, RI “float” is not completely random. Reservations have an affinity for the account in which they were purchased, so the “float” will only occur if there is no instance usage within the original purchasing account that can take advantage of the Reservation.

Another important thing to note: if you have Availability Zone Scoped RIs that have both a benefit of price reduction and capacity reservation, only the price reduction benefit will “float.” In other words, if you have an available AZ Reservation in account A, Amazon will not guarantee you can launch an equivalent instance in account B, even if these accounts are linked into the same consolidated billing account.

Still have more questions?

Join me and Vikram Pillai, CloudHealth’s Chief Architect, for a webinar on Everything You've Always Wanted to Know About RIs (But Were Afraid to Ask) to get more information.

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