EC2 Instance Savings plan hourly commitment calculation

Thank you for your detailed question about EC2 Instance Savings Plans. I'll address your points one by one to clarify the concept.

1. Hourly commitment calculation: For 200 hours average usage per month: Hourly commitment = (200 hours * $0.579/hr) / 730 hours in a month ≈ $0.159/hr

For 300 hours average usage per month: Hourly commitment = (300 hours * $0.579/hr) / 730 hours in a month ≈ $0.238/hr

These calculations ensure that your commitment covers your average usage.

2. Setting $0.1/hr commitment with 300 hours usage: If you set the hourly commitment to $0.1/hr and use the instance for 300 hours a month:

• The first 126.08 hours (($0.1/hr * 730 hours) / $0.579/hr) would be covered by the Savings Plan rate.
• The remaining 173.92 hours would be charged at the On-Demand rate.

3. Significance of $73 monthly payment and $2,628 total cost: The $73 monthly payment is likely the amortized cost of your Savings Plan commitment over the 3-year term. This means AWS is spreading the total cost evenly across 36 months.

The total cost of $2,628 represents the entire commitment for the 3-year term ($73 * 36 months).

However, your interpretation is not correct. The Savings Plan doesn't limit you to using only 126 hours at the discounted rate. Instead, it provides a discount on usage up to your hourly commitment, regardless of how many hours you use.

To maximize savings, you should set your hourly commitment based on your expected consistent usage. Any usage beyond your commitment will be charged at On-Demand rates. If your usage varies significantly, you might consider a Compute Savings Plan for more flexibility across instance families and regions.

Remember, Savings Plans require you to pay for the committed amount for the entire term, regardless of actual usage. Therefore, it's crucial to carefully analyze your usage patterns before making a commitment.
Sources
Community | Introduction to Amazon EC2
Understanding your recommendation calculations - Savings Plans
Purchasing a custom Savings Plan commitment - Savings Plans
Best Practice 18.1 – Understand the payment and commitment options available for Amazon EC2 - SAP Lens

Hello,

"The Savings Plan doesn't limit you to using only 126 hours at the discounted rate. Instead, it provides a discount on usage up to your hourly commitment, regardless of how many hours you use."

Here's how it works:

If you set a $0.1/hour commitment:

You're committing to pay $0.1 * 730 = $73 per month. This gives you $73 worth of compute at the Savings Plan rate ($0.579/hr). For any usage:

The first $73 worth of compute (about 126 hours at $0.579/hr) will be at the Savings Plan rate. Any usage beyond that will be at the On-Demand rate. If you use 300 hours:

About 126 hours will be at the Savings Plan rate. The remaining hours (about 174) will be at the On-Demand rate.