EC2 Instance Savings plan hourly commitment calculation

Hello Niamat,

A savings plan is a dollar based commitment to either compute, or ec2 - depending on the version of the savings plan that you are buying. In your case, you are wanting to buy an EC2 Savings plan to cover a single r5.4xlarge instance. If we look here: https://aws.amazon.com/savingsplans/compute-pricing/ we can see that with no-upfront you are getting a rate of 0.525 per hour for that instance. This means you should commit $0.525 per hour to your savings plan if you would like this instance covered. This works out to a monthly cost of 383.25.

Now the important part here is that a savings plan is a commitment to use the platform, therefore you will pay for the savings plan, regardless if you have a matching instance running. So if you only run your r5.4xlarge for 300 hours, you would still pay 383.25 a month.

You therefore have to calculate the on-demand cost for 300 hours (300x1.216 = 364.80), which is slightly less than the 383.25 , and see what works out for you. In this case, if you are only running for 300 hours, then it is a little cheaper to run on-demand (i.e., don't buy a savings plan), however if you intend to run for 400 hours, then the on-demand cost would be 486.40, which is more expensive than what you would be paying if you purchased the savings plan you intend too.

You can calculate the exact number of hours a month, after which a savings plan begins to make sense, by diving the savings plan cost with the on-demand hourly cost of the instance type you wish to run. In this case 383.25/1.216 is 315.17, so if you are running your instance for less than 315.17 hours a month, then it is cheaper to just run on-demand, whereas if you run it consistently for more than 315.17 hours a month, then you should consider the savings plan that you wish to purchase (if you can guarantee that you will have this usage for the next 3 years).