How to Maximize Cost Savings with AWS Savings Plans

27 December 2022

Want to cut your AWS costs significantly? You’re in the right place! In this guide, we’ll show you how to take full advantage of AWS Savings Plans to optimize your spending and unlock substantial savings.

AWS Savings Plans offer a flexible pricing model that provides much lower rates than on-demand pricing. By committing to a consistent usage level, you can secure savings of up to 72% on your AWS compute costs.

And there’s more! We’ll walk you through selecting the ideal Savings Plan tailored to your specific needs—whether it’s based on instance types, regions, or family sizes. With our expert insights and strategies, you’ll be equipped to maximize your savings and achieve long-term cost efficiency.

What Are AWS Savings Plans and How Do They Work?

AWS Savings Plans are a pricing model designed to help businesses reduce their AWS compute costs. By committing to consistent usage levels, you can access significantly lower rates compared to on-demand pricing. Savings Plans apply to EC2 instances, Fargate usage, and Lambda functions.

When you purchase an AWS Savings Plan, you agree to a consistent usage level (measured in dollars per hour) for a term of one or three years. This commitment enables AWS to offer you lower rates, leading to substantial savings. The more you commit, the greater your potential savings.

AWS Savings Plans are flexible and automatically apply to your eligible usage, no matter the instance family, size, or region. This flexibility makes it easier to achieve savings across your entire AWS infrastructure without needing complex resource management.

Benefits of Using AWS Savings Plans

There are several key benefits to using AWS Savings Plans for your business:

Significant Cost Savings: By committing to a consistent usage level, you can secure up to 72% in savings on your AWS compute costs. This can significantly reduce your expenses and free up resources for other areas of your business.
Flexibility: Savings Plans automatically apply to your eligible usage, regardless of instance type, size, or region. This flexibility allows you to realize savings across your entire AWS infrastructure without complicated resource allocation.
Simplified Pricing: With Savings Plans, you don’t have to manage complicated pricing structures or constantly monitor usage. Your commitment ensures you receive lower rates, simplifying budgeting and cost management.
Long-Term Cost Efficiency: By committing to a one- or three-year term, AWS Savings Plans provide long-term cost efficiency, allowing you to plan your AWS expenses and ensure you’re maximizing your cloud infrastructure investment.

Understanding the Different Types of AWS Savings Plans

AWS offers several types of Savings Plans to cater to different business needs. Understanding these options is crucial to selecting the right plan for your requirements. The primary types of AWS Savings Plans are:

Compute Savings Plans

These plans offer the greatest flexibility, providing savings on EC2 instances, Fargate usage, and Lambda functions. Compute Savings Plans allow you to save on a wide variety of instance families across all AWS regions, helping you optimize your compute costs effectively.

EC2 Instance Savings Plans

EC2 Instance Savings Plans are tailored to deliver significant cost savings on EC2 instances within a specific region, offering discounts of up to 72% compared to on-demand pricing. These plans are available for both Linux and Windows instances, making them a flexible option for a wide range of businesses.

By committing to a particular EC2 instance family within a region, users can lock in these reduced rates, which are ideal for businesses with consistent, steady-state workloads. The key advantage of EC2 Instance Savings Plans is their regional focus, ensuring that the savings are applied directly to the selected EC2 family within the chosen region. This regional targeting allows businesses to optimize their compute costs effectively while benefiting from predictable pricing.

SageMaker Savings Plans

AWS SageMaker Savings Plans offer a flexible pricing model that enables customers to save on Amazon SageMaker costs by committing to a consistent level of usage (measured in dollars per hour) for a one- or three-year term. This approach allows users to achieve substantial savings compared to on-demand pricing, particularly for those with predictable SageMaker workloads. With this savings plan, businesses can optimize their SageMaker costs while benefiting from lower, more predictable pricing, making it an ideal option for long-term, steady usage.

Calculating Potential Cost Savings with AWS Savings Plans

Before committing to an AWS Savings Plan, it’s important to understand the potential cost savings you can achieve. AWS provides a Savings Plans calculator that helps estimate your savings based on current usage patterns.

To calculate potential savings, input details about your usage, instance types, and regions. The calculator will then provide an estimate based on different Savings Plan options, helping you make an informed decision on which plan suits your business best.

By analyzing your usage and comparing it to the potential savings, you can choose the most cost-effective plan for the highest return on investment.

How to Choose the Right AWS Savings Plans for Your Business

Selecting the right AWS Savings Plans requires considering your business’s specific needs and usage patterns. Here are the key factors to take into account when choosing a plan:

Usage Patterns

Understanding your usage patterns is key to identifying the Savings Plan that fits your needs. For businesses with steady workloads, EC2 Instance Savings Plans may be the best option due to their high discount rates. However, for varied usage across multiple AWS services, Compute Savings Plans may offer the flexibility you need.

Instance Families

It’s crucial to understand the instance families you are using and select a Savings Plan that covers those instances. If you have specific instance requirements, Dedicated Savings Plans might be ideal. Aligning your Savings Plan with your instance families ensures maximum savings.

Regional Usage

Take your regional usage into consideration. If you primarily use AWS services in specific regions, EC2 Instance Savings Plans for those regions can unlock higher discounts. Alternatively, for operations across multiple regions, the regional flexibility of AWS Savings Plans may offer broader savings potential.

By carefully considering these factors, you can select the Savings Plan that will provide the most savings for your business.

Implementing AWS Savings Plans in Your Cost Optimization Strategy

To integrate AWS Savings Plans into your cost optimization strategy, follow these steps:

Analyze Current Usage: Use the AWS Savings Plans calculator to assess your current usage and estimate potential savings. This will help you identify which Savings Plans are most suitable for your needs.
Choose the Right Savings Plans: Based on your usage analysis, select the plan that aligns with your usage patterns, instance families, and regions. Longer-term commitments typically offer higher savings rates.
Purchase the Savings Plans: Once you’ve selected your Savings Plans, purchase them through the AWS Management Console.
Monitor Usage: Regularly monitor your AWS usage to ensure it aligns with your Savings Plans. Adjust as needed based on evolving infrastructure needs.
Track Savings: Use AWS Cost Explorer to track savings over time, measure the effectiveness of your strategy, and identify opportunities for further optimization.

Monitoring and Tracking Your AWS Savings Plans

To maximize your savings and ensure your optimization efforts are working, monitor your Savings Plans using the following AWS tools:

AWS Cost Explorer

AWS Cost Explorer offers a comprehensive view of your AWS costs, including savings from Savings Plans. Use this tool to analyze trends and identify areas where further optimization is possible.

AWS Budgets

With AWS Budgets, you can set custom cost and usage budgets for your AWS services. Create specific budgets for your Savings Plans to track savings and receive alerts when usage exceeds budgeted amounts.

AWS Cost and Usage Reports

The AWS Cost and Usage Reports provide detailed insights into your AWS costs and usage. Analyze these reports to ensure you’re maximizing your Savings Plans and to identify any discrepancies.

Conclusion and Final Thoughts on Leveraging AWS Savings Plans for Cost Savings

AWS Savings Plans provide a powerful solution for businesses aiming to reduce their AWS costs. By committing to consistent usage, you can secure savings of up to 72% on your AWS compute costs. With flexible pricing options and the ability to apply savings across your infrastructure, Savings Plans are an effective way to optimize spending.

To leverage AWS Savings Plans effectively:

Consider your specific needs, usage patterns, and instance families.
Use the AWS Savings Plans calculator to estimate savings.
Implement your chosen Savings Plans into your cost strategy.
Regularly monitor and track your savings using AWS tools.

By following these steps, you can optimize your AWS expenses and achieve long-term cost efficiency. Start optimizing your AWS costs today and elevate your cloud infrastructure.