AWS EC2 Pricing – A Complete Guide to Control Cloud Cost

6 Mins read

Amazon Web Services (AWS) continues to lead as the top cloud service, holding a 32% market share as of mid-2023, as per a report by Synergy Research Group. Amazon Elastic Compute Cloud (EC2) stands out as the most utilized service on AWS. This service facilitates easy access for developers to get compute resources in the AWS Cloud. 

AWS provides over 300 ‘instances, each configured with a specific CPU, RAM, storage type, and network performance. These instances are categorized into ‘instance types,’ optimized for various compute workloads. Given the multitude of options, it becomes necessary to monitor EC2 workloads for performance and cost efficiency. This blog will guide you in choosing the right instances and exploring the different EC2 pricing models that help you maximize benefits while optimizing cloud costs. 

List of contents 

What is AWS EC2?
What are the different types of AWS EC2 instances?
Uses of the different EC2 instances
How to choose your AWS EC2 instance
Amazon EC2 pricing options
Getting started with AWS EC2

What is AWS EC2? 

AWS EC2 delivers cloud-based compute capacity, simplifying the lives of developers with secure and resizable resources. It streamlines the scaling process, seamlessly integrates with other services, and operates on a pay-as-you-go model based on actual usage. 

At the core of EC2 is the EC2 instance—a virtual machine running an operating system atop resources like CPU, memory, and hard disk. EC2 allows quick provisioning of secure instances, tailored to run the necessary business software, available within minutes. 

When initiating an EC2 instance, you must select the instance type and size, thereby determining resource capacity and hourly pricing. This can be done manually through the AWS Management Console or programmatically.  

What are the different types of AWS EC2 instances? 

Amazon EC2 offers a diverse range of instance types tailored to suit various use cases. These instance types encompass different combinations of CPU, memory, storage, and networking capacity, providing the flexibility to select the ideal mix of resources for your applications. Each instance type is available in one or more sizes, enabling you to scale your resources according to the demands of your specific workload. 

Instance types are categorized based on their family, generation, processor family, additional capabilities, and size. In the instance type name, the first position denotes the instance family (e.g., c), the second position indicates the instance generation (e.g., 7), and the third position specifies the processor family (e.g., g). Any remaining letters before the period (.) signify additional capabilities, such as instance store volumes. This nomenclature system allows you to easily identify and choose the instance type that best aligns with your requirements. 

The different AWS EC2 instances are:  

  • General purpose: M4, M5, M5n, M5zn, M5a, M6a, M6g, M6i, M6in, M7a, M7g, M7i, M7i-flex, Mac, T4g, T3, T3a, T2 
  • Compute optimized: C4, C5a, C5n, C5, C6a, C6g, C6gn, C6i, C6in, C7a, C7g, C7gn, C7i 
  • Memory optimized: R4, R5, R5n, R5b, R5a, 6a, R6g, R6i, R6in, R7a, R7g, R7i, R7iz, R8g, X2gd, X2idn, X2iedn, X2iezn, X1, X1e, High Memory, z1d 
  • Storage optimized: I4g, I4i, Im4gn, Is4gen, I3, I3en, D2, D3, D3en, H1 
  • Accelerated computing: DL2q, DL1, G3, G4dn, G4ad, G5, G5g, Inf2, Inf1, P5, P4, P3, P2, Trn1, F1, VTT1 
  • High-performance computing: Hpc6a, Hpc6id, Hpc7a, Hpc7g 

Uses of the different EC2 instances 

General-purpose instances provide a well-balanced mix of compute, memory, and networking resources, making them suitable for a diverse range of workloads. These instances are particularly effective for applications that utilize these resources in equal proportions, such as web servers and code repositories. 

Compute-optimized instances are tailored for compute-intensive applications that gain substantial benefits from high-performance processors. This category excels in handling tasks like batch processing, media transcoding, high-performance web servers, high-performance computing (HPC), scientific modeling, dedicated gaming servers, ad server engines, machine learning inference, and other compute-intensive applications. 

Memory-optimized instances aim to deliver swift performance for workloads dealing with large datasets primarily processed in memory. 

Accelerated computing instances leverage hardware accelerators or co-processors to execute functions like floating-point calculations, graphics processing, or data pattern matching more efficiently than achievable through software running on CPUs. 

Storage-optimized instances cater to workloads necessitating high, sequential read and write access to extensive datasets on local storage. They are optimized to deliver tens of thousands of low-latency, random I/O operations per second (IOPS) to applications. 

High-Performance Computing (HPC) instances are purpose-built to provide optimal price performance for running HPC workloads at scale on AWS. These instances are well-suited for applications that demand high-performance processors, such as large, complex simulations and deep learning workloads. 

How to choose your AWS EC2 instance 

When trying to decide the AWS EC2 instance for your needs, you can consider the following guidelines: 

1. Start with General-purpose Instances: 

In case you’re uncertain about your application’s performance characteristics, begin with one of the general-purpose instance families. These instances provide a balanced mix of compute, storage, and memory. Conduct stress tests to identify any limitations in these components and refine your choice accordingly. 

2. Take Decisions Based on Hard Data: 

Avoid making assumptions about your application requirements; instead, gather hard data. Overprovisioning or under-provisioning can lead to unnecessary expenses or a subpar user experience. Perform thorough testing to ensure your selection aligns with your application’s demands. Remember that it’s easy to switch to a different instance or family based on your findings. 

3. Consider the Most Recent Generation Instances: 

To optimize cost-effectiveness, explore the most recent generation instance types. These instances typically offer the best price/performance ratio, helping you achieve efficiency and value for your investment. 

4. Consider Regional Price Variations: 

Keep in mind that EC2 prices can vary across regions. If your EC2 instances can be placed flexibly, take the time to compare prices in different regions. This flexibility can result in cost savings without  

compromising performance. 

5. Automate Instance Management: 

Save costs by automating the activation and deactivation of non-production instances. Many workloads do not require operation outside of business hours, nights, or weekends. Turning them off during these periods prevents unnecessary usage hours and reduces expenses. 

6. Choose the Right Payment Option: 

Once you’ve identified the EC2 instances that suit your use case, decide on the most appropriate payment option. AWS offers various EC2 instance pricing options, allowing you to align your payment structure with your budget and usage requirements. 

Amazon EC2 pricing options 

Amazon EC2 provides various pricing options to cater to diverse user needs: 

1. On-Demand Instances:  

On-Demand Instances offer flexibility by allowing users to pay for compute capacity hourly or secondly without any long-term commitments. This eliminates the need for upfront payments and long-term commitments, transforming large, fixed costs into smaller variable costs. On-demand instances are suitable for users seeking low-cost flexibility without upfront payments, applications with short-term or unpredictable workloads, and those developing or testing applications on EC2 for the first time.

2. Savings Plans and Reserved Instances:  

Savings Plans present a flexible pricing model designed to reduce bills by up to 72% compared to On-demand prices. Users commit to a consistent amount of usage (measured in $/hour) for a 1- or 3-year term. AWS offers three types of Savings Plans: Compute Savings Plans, EC2 Instance Savings Plans, and Amazon SageMaker Savings Plans. These plans are recommended for committed and steady-state usage, providing users the opportunity to leverage the latest compute offerings while saving costs. 

Reserved Instances also involve making a commitment for either one year or three years, offering a billing discount of up to 72%. However, it doesn’t equate to a dedicated instance for your organization. Instead, it represents a billing discount applied to the use of On-Demand Instances in your account. To benefit from the billing discount, these On-Demand Instances must align with certain attributes of the Reserved Instances you’ve procured. The payment covers the entire term of the Reserved Instance, regardless of actual usage, emphasizing the importance of aligning cost savings with usage patterns.

3. Amazon EC2 Spot Instances:  

Spot Instances allow users to utilize unused EC2 capacity at a discount of up to 90% compared to On-Demand prices. These instances are suitable for fault-tolerant or stateless workloads, applications compatible with heterogeneous hardware, and those with flexible start and end times.

4. Dedicated Hosts:  

Dedicated Hosts offer users a physical EC2 server fully dedicated to their use. This option enables cost savings by utilizing existing server-bound software licenses, including Windows Server, SQL Server, and SUSE Linux Enterprise Server (subject to license terms). Dedicated Hosts can be purchased on-demand (hourly) or as part of Savings Plans. They are recommended for users seeking savings on licensing costs, workloads requiring dedicated physical servers, and those looking to offload host maintenance to AWS while controlling maintenance schedules to align with their operational needs. 

Getting started with managed AWS EC2 by ZNetLive 

EC2 stands as a central component in numerous cloud architectures. Effectively managing EC2 usage and costs not only strengthens your cloud infrastructure but also maximizes the benefits derived from it.  

ZNetLive’s managed AWS EC2 services empower businesses to unlock the full potential of their websites.  

ZNetLive AWS EC2 plans

Our team of AWS-certified engineers conducts a thorough consultation to understand your specific cloud needs. Choose from our diverse range of flexible plans tailored to meet your unique business requirements. Experience a seamless deployment process, where our swift and efficient setup ensures your AWS EC2 instance is operational in no time. Moreover, get the support of expert professionals with a dedicated system available 24/7 to address any assistance you may require. 

For more details on AWS EC2 services offered by ZNetLive, visit this page: 

Read next: How to migrate your website to AWS hosting: A comprehensive guide

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Amy Sarah John – content writer interested to learn and write about new things. She likes to write about technology and travel. Amy spends her free time watching travel videos and traveling with family.
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