Slash Your AWS Bill: Unlock Up to 72% Savings with Savings Plans

Are you tired of hefty AWS bills? Many businesses overspend on cloud computing because they’re unaware of cost-optimization strategies. One of the most effective ways to significantly reduce your AWS spending is by leveraging AWS Savings Plans. This post will explain how they work and how you can determine the best approach.

The High Cost of On-Demand Pricing

A common issue is that many companies are paying full price for on-demand instances without exploring cost-saving options. This usually stems from:

Lack of awareness about Savings Plans.
Difficulty in accurately estimating their cloud usage.
Uncertainty about the right commitment level.

Savings Plans vs. Reserved Instances: Which is Right for You?

AWS provides two primary methods to save on compute costs: Savings Plans and Reserved Instances (RIs). Let’s compare them:

Feature	Compute Savings Plans	Reserved Instances (RIs)
Flexibility	Applies to EC2, Fargate, Lambda	EC2 specific only
Commitment	Fixed hourly dollar amount	Tied to a specific instance type
Discount	Up to 72% savings	Up to 75% savings
Instance Changes	Flexible	Not flexible

Recommendation: In most cases, Compute Savings Plans offer greater flexibility and are the preferred choice over Reserved Instances. RIs are only recommended if you have a completely static and unchanging workload.

Calculating Your Ideal Savings Plan Commitment

Before committing to a Savings Plan, it’s crucial to analyze your current AWS usage. You can use the AWS CLI to achieve this.

For example, to review the usage of the past 13 months.

aws ce get-reservation-coverage --time-period Start=2024-03-06,End=2025-03-05

An example of output could be this:

{
    "Total": {
        "CoverageHours": {
            "OnDemandHours": "70180.93",
            "ReservedHours": "0",
            "TotalRunningHours": "70180.93",
            "CoverageHoursPercentage": "0"
        }
    }
}

Interpreting the Results:

A CoverageHoursPercentage of “0” indicates you are currently paying the full on-demand price for all your instances.
“OnDemandHours”: “70180.93” shows your total instance hours for the specified period.

To determine your average daily usage, divide the total hours by the number of days in the period:

70180.93 hours / 365 days ≈ 192.3 hours/day

Recommendation:

Start with a Compute Savings Plan that covers approximately 50-70% of your average daily usage.
Monitor your savings over the next three months, and adjust your Savings Plan commitment as needed.

How to Purchase Savings Plans in AWS

Navigate to the AWS Management Console, then to Billing, and select “Savings Plans.”
Choose “Compute Savings Plan.”
Specify the hourly dollar amount you want to commit to.
Select your commitment term: either 1 year or 3 years.
Review the displayed savings percentage and confirm your purchase.

Tip: Begin with a smaller commitment and gradually increase it as you assess your actual savings.

Real-World Example: Achieving 55% Savings

Consider a company spending $2,000 per month on on-demand EC2 instances. By analyzing their usage patterns and implementing a Compute Savings Plan of $1,200 per month, they could achieve a 55% reduction in their EC2 costs without sacrificing any flexibility.

This illustrates the importance of always exploring Savings Plans before resorting to on-demand pricing.

Conclusion

By taking some time to analyze and optimize your AWS costs, your company can achieve great results.
Savings plans are a great tool for optimizing cloud costs.

Optimize Your AWS Costs with Innovative Software Technology

Are you looking to maximize your savings on AWS? At Innovative Software Technology, we specialize in cloud cost optimization. Our expert team can help you:

Analyze your current AWS usage: Identify areas where you’re overspending.
Develop a tailored Savings Plan strategy: Maximize your discounts with the right commitment level.
Implement and manage your Savings Plans: Ensure continuous cost optimization.
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Don’t leave money on the table. Contact Innovative Software Technology today for a free consultation and discover how we can significantly reduce your AWS expenses.