When running workloads on AWS, cost optimization is always a priority. AWS offers Savings Plans as a way to significantly reduce compute costs, but choosing the right one can make a big difference. In this blog, we’ll explore the differences between Compute Savings Plans, EC2 Instance Savings Plans, and Reserved Instances, and help you determine which is best for your business.

Understanding AWS Savings Plans

AWS Savings Plans offer discounted pricing in exchange for a commitment to a specific amount of usage, measured in dollars per hour, over a one- or three-year term. These plans provide a flexible alternative to traditional Reserved Instances, offering cost savings while maintaining some level of flexibility.

There are two main types of Savings Plans:

  • Compute Savings Plans – Offer broad flexibility across multiple AWS compute services.
  • EC2 Instance Savings Plans – Provide higher potential savings but with more specific commitments.

Compute Savings Plans: Flexibility at a Discount

Compute Savings Plans are the most flexible option, allowing savings of up to 66% compared to On-Demand pricing. These plans automatically apply to your EC2 instances, AWS Fargate, and AWS Lambda usage—regardless of region, instance family, operating system, or tenancy.

When to choose Compute Savings Plans:

  • If your workloads shift between different EC2 instance families.
  • If you operate workloads across multiple AWS regions.
  • If you use AWS Fargate or AWS Lambda in addition to EC2.
  • If you need flexibility to adapt your infrastructure as requirements change.

EC2 Instance Savings Plans: Maximum Savings for Specific Needs

EC2 Instance Savings Plans offer even greater savings, up to 72%, but with a narrower scope. These plans apply only to a specific EC2 instance family within a chosen AWS region. However, you still have some flexibility to change instance sizes, operating systems, and tenancy within that instance family and region.

When to choose EC2 Instance Savings Plans:

  • If you have stable, predictable workloads that use a specific instance family.
  • If your workloads are locked into a particular AWS region.
  • If you are looking for the highest possible savings.

Reserved Instances: The Traditional Cost-Saving Model

AWS Reserved Instances (RIs) provide another way to save on compute costs by committing to specific Amazon EC2 configurations over a one- or three-year term. In return, AWS offers discounts of up to 72% compared to On-Demand pricing.

Why Are Reserved Instances Considered Traditional?

Reserved Instances were one of AWS’s earliest cost-saving mechanisms, introduced before Savings Plans. They require users to commit to specific instance attributes like instance type, region, and tenancy, making them less flexible than Savings Plans. However, they still provide substantial cost benefits for businesses with consistent, long-term compute needs.

When to Choose Reserved Instances:

  • If you have predictable, steady-state workloads that won’t change over time.
  • If you need capacity reservations in a particular Availability Zone to ensure instance availability.
  • If you are running long-term projects where infrastructure requirements are well-defined.

Comparison Table

Feature Compute Savings Plans EC2 Instance Savings Plans Reserved Instances
Discount Savings Up to 66% ✅ Up to 72% ✅ Up to 72% ✅
Flexibility High ✅ Medium ⚠️ Low ❌
Applies to Multiple Regions ✅ Yes ❌ No ❌ No
Covers AWS Fargate/Lambda ✅ Yes ❌ No ❌ No
Instance Family Flexibility ✅ Yes ⚠️ Limited to one family ❌ No
Capacity Reservation ❌ No ❌ No ✅ Yes
Best For Dynamic workloads ✅ Specific EC2 instances in one region ✅ Predictable, long-term workloads ✅

Choosing the Right Plan for Your Business

Both Savings Plans and Reserved Instances offer substantial cost reductions, but the right choice depends on your usage patterns. If you need flexibility, Compute Savings Plans are the best option. If you have predictable workloads that won’t change significantly, EC2 Instance Savings Plans or Reserved Instances provide the greatest savings.

Final Tip: AWS provides a Savings Plans recommendation tool in the AWS Cost Explorer to help analyze your current usage and suggest the most cost-effective option.