AWS Pricing Models
Compare and contrast the various pricing models for AWS
What you will learn
- Distinguish On-Demand from upfront commitment (Reserved/Savings Plans) in terms of risk and discount.
- Explain why Spot Instances suit certain workloads and not others.
- Identify each Free Tier offer's type — always-free, 12-month limited, or a short trial.
- Choose the cheapest pricing model for a given workload scenario.
There is no single "AWS price" — the same instance can cost very different amounts depending on the pricing model you choose. The general rule: the more you commit upfront, in volume or duration, the bigger the discount. And the more risk you accept (like resources being reclaimed suddenly), the lower the price goes.
The core models
| On-Demand | You pay by the hour or second with no upfront commitment — the most expensive per unit, and the most flexible. |
|---|---|
| Reserved Instances | A one- or three-year commitment for a significant discount versus On-Demand, tied to a specific instance type and region. |
| Savings Plans | A commitment to a fixed hourly spend amount for one or three years, with more flexibility than Reserved in which service is used. |
| Spot Instances | Spare compute capacity at a very steep discount, but AWS may reclaim it with very short notice (about two minutes). |
Commitment vs. flexibility
| On-Demand | Reserved Instances / Savings Plans | |
|---|---|---|
| Upfront commitment | None | One or three years |
| Relative discount | No discount — the base rate | Large, potentially a substantial percentage off the On-Demand rate |
| Best suited for | Unpredictable or short-lived workloads | Steady, predictable long-term workloads |
When Spot Instances fit
A team runs nightly batch image processing, and the job can pause and resume from a checkpoint without losing significant progress. This is an ideal Spot scenario: the cost is far lower than On-Demand, and a sudden reclaim doesn't hurt because the job tolerates it and resumes later.
What matters on the exam
- "Steady, predictable load for three years" points to Reserved/Savings Plans; "can pause and resume" points to Spot.
- The Free Tier has three types: always-free within a monthly limit, 12-month limited, and short-term trials — exceeding the limit is billed at the normal rate immediately.
The sudden reclaim is real
A Spot Instance is not "a regular instance that's just cheap" — AWS may reclaim it with very short notice (about two minutes) if it needs the capacity for an On-Demand or Reserved customer. Using it for a workload that can't tolerate interruption (like a live production database) is a real design mistake, not just a theoretical risk.
Quick check
Answer in your head first, then reveal.
Which pricing model requires no upfront commitment at all?Reveal the answer
On-Demand.
Why doesn't a Spot Instance suit a live production database?Reveal the answer
Because AWS may reclaim it with very short notice, and a live database can't tolerate that interruption.
What is the flexibility difference between Reserved Instances and Savings Plans?Reveal the answer
Savings Plans are more flexible about which service is used, within the same committed spend.
What happens when the Free Tier's monthly limit is exceeded?Reveal the answer
The excess usage is billed at the normal rate immediately.
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Your next step
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Sources
Used to verify the facts. The writing is original to Passuit.
- AWS — Pricing Overview whitepaperTier 1
- AWS — Free TierTier 1