Amazon Web Services (AWS) provides a variety of pricing options designed to help organizations manage their cloud spending efficiently. Among these, Compute Savings Plans offer a flexible and cost-effective way to save on compute usage across AWS services. This knowledgebase will explore the details of Compute Savings Plans, including their benefits, usage scenarios, purchasing options, and strategies for maximizing savings.

 Compute Savings Plans

AWS Compute Savings Plans are designed to provide customers with significant cost savings on their compute usage in exchange for committing to a specific amount of usage over a one- or three-year term. This pricing model allows organizations to optimize their cloud spending while benefiting from the flexibility of using AWS services without being locked into specific instance types or regions.

Understanding Compute Savings Plans

Compute Savings Plans differ from other AWS savings plans, providing customers with a straightforward approach to achieving savings while maintaining operational flexibility.

Types of Savings Plans

There are three primary types of Savings Plans offered by AWS:

• Compute Savings Plans: These plans offer the most flexibility, allowing customers to save on any EC2 instance, regardless of region, instance family, operating system, or tenancy.
• EC2 Instance Savings Plans: These are more restrictive, offering savings on specific instance families within a designated region.
• Amazon RDS Savings Plans: These plans provide discounts specifically for Amazon RDS usage.

In this knowledgebase, we focus on Compute Savings Plans, which cater to a broader range of compute services.

Key Features

• Flexibility: Compute Savings Plans apply automatically to any EC2 instances or Fargate tasks you run, regardless of type or location.
• Commitment Levels: Customers can choose a commitment level that suits their anticipated usage, either by dollar amount or specific compute usage.
• Automatic Application: Savings Plans are applied automatically to usage, ensuring customers benefit from discounts without needing to manage specific resources.

How Compute Savings Plans Work

When a customer purchases a Compute Savings Plan, they commit to a specific amount of compute usage (measured in dollars per hour) for a one- or three-year period. In return, AWS offers discounts on the usage that exceeds the committed amount.

• Hourly Commitment: For example, if a customer commits to $10 per hour, they will receive savings on their compute usage. If they use $15 worth of compute services in a given hour, they will pay the discounted price for the first $10 and the full price for the remaining $5.
• Automatic Discounts: Discounts are automatically applied to your usage, reducing your overall AWS bill without the need for additional configuration.

Benefits of Compute Savings Plans

Compute Savings Plans provide numerous benefits for organizations leveraging AWS services:

• Cost Savings: Customers can save up to 66% compared to On-Demand pricing, making it a cost-effective option for predictable workloads.
• Flexibility: Unlike other savings plans, Compute Savings Plans offer flexibility in how and where compute resources are used, allowing organizations to adapt to changing business needs.
• Simplified Billing: With automatic application of discounts, organizations can streamline their billing process and simplify cost management.
• Scalability: Organizations can scale their compute resources without concern for savings plan commitments, as Compute Savings Plans apply across all usage.

Use Cases for Compute Savings Plans

Compute Savings Plans are well-suited for various use cases, including:

• Steady-State Workloads: Applications with predictable and consistent compute requirements can benefit significantly from Compute Savings Plans.
• Development and Testing Environments: Organizations can utilize Compute Savings Plans for development and testing workloads, which may require variable resource usage.
• Data Processing and Analytics: Workloads that require high compute capacity for processing large data sets can take advantage of cost savings while maintaining flexibility.

Purchasing Compute Savings Plans

Purchasing Compute Savings Plans is a straightforward process, allowing organizations to select the options that best fit their needs.

Pricing and Commitment Options

Compute Savings Plans are available in two commitment options:

• One Year Commitment: A shorter commitment period that offers a lower discount compared to a three-year commitment.
• Three Year Commitment: This option provides deeper discounts in exchange for a longer commitment period.

Additionally, customers can choose from three payment options:

• All Upfront: Pay the entire cost of the commitment upfront for maximum savings.
• Partial Upfront: Pay a portion of the cost upfront and the remainder in monthly installments.
• No Upfront: No initial payment is required, but payments are made monthly over the commitment period.

How to Purchase

To purchase a Compute Savings Plan, follow these steps:

1. Log into the AWS Management Console: Access your AWS account.
2. Navigate to the Savings Plans Dashboard: Find the option under the billing and cost management section.
3. Select Compute Savings Plans: Choose the Compute Savings Plan option.
4. Specify Your Commitment: Determine your hourly commitment level and select your payment option.
5. Review and Confirm: Review your selections and confirm the purchase.

Maximizing Savings with Compute Savings Plans

To ensure you are getting the most out of your Compute Savings Plans, consider the following strategies:

Monitoring Usage

Regularly monitor your AWS usage through the AWS Cost Explorer to ensure that you are utilizing your Compute Savings Plan effectively.

• Track Usage Patterns: Analyze your usage patterns to identify trends and adjust your commitment levels accordingly.
• Identify Underutilization: If you find that you consistently use less than your committed amount, consider adjusting your plan or purchasing additional savings plans.

Utilizing AWS Cost Management Tools

AWS provides various cost management tools to help track and optimize spending:

• AWS Budgets: Set budgets for specific AWS services and receive alerts when you approach or exceed those limits.
• AWS Cost Explorer: Visualize your spending and identify areas where you can optimize costs further.
• AWS Trusted Advisor: Get recommendations for cost optimization, including insights on Savings Plans usage.

Limitations of Compute Savings Plans

While Compute Savings Plans offer significant benefits, there are some limitations to consider:

• Commitment Requirements: Customers must commit to a specific usage level, which may not be suitable for all organizations, especially those with highly variable workloads.
• No Savings on Reserved Instances: Compute Savings Plans do not provide savings on Reserved Instances; therefore, organizations must consider their specific use cases when selecting a pricing model.
• Limited to Compute Usage: Compute Savings Plans only apply to compute usage and do not cover other AWS services outside of EC2 and related services.

AWS Compute Savings Plans provide a powerful tool for organizations looking to optimize their cloud spending while maintaining the flexibility needed to adapt to changing workloads. By understanding how Compute Savings Plans work, the benefits they offer, and how to purchase and manage them effectively, organizations can achieve significant savings on their AWS compute costs. By leveraging AWS cost management tools and regularly monitoring usage, businesses can ensure they are maximizing the benefits of their Compute Savings Plans while supporting their operational goals in the cloud.