New AWS Reservation Options: what do they mean for your business?

If your finger’s on the AWS pulse, you may have seen the news today from AWS about changes to their reservations. You can read the announcement here.

But what does this mean for you?

Well, there are a couple of interesting new options for applying reservations, which make reservations somewhat more flexible. It is worth calling out these new options and some of the caveats around them.

1. You can now choose to waive the capacity reservation element of a reserved instance in return for the benefit of the reserved instance applying across availability zones.

For customers relying only on the cost saving and making purchases at a master account level, this is a major benefit. The float will allow a much cleaner way of realising benefit over green/blue deployments and autoscaling environments. Of course, if reservations are being made additionally for capacity management purchases (i.e. in the account within which the instances are required) then this will need to be considered ahead of purchasing new floating reservations.


2. You can now choose to purchase ‘convertible’ reservations which can be switched between instance families.

On the face of it this would seem to be a clear benefit in the event that the purchaser does not have a clear understanding of their capacity requirements going forward, as it allows a ‘trade-up’ between reservations in the event that they no longer meet requirements. However, there are a number of key considerations to making these purchases:


a) Convertible reservations can only be made over a 3 year period

This represents a significant time commitment to retaining workloads in AWS, and as we will see below, your commitment can only stay the same or increase.

b) Savings from convertible instances are less than the equivalent ‘standard’ 3 year reservation

Taking a typical instance type (m4.large) and an all-upfront payment, you would receive the following discounts on an instance (assuming that the instance is run 24/7 for the reservation term)

1 year standard: 37% discount

3 year standard: 57% discount

3 year convertible: 43% discount

This will clearly have an impact on decision-making regarding whether convertible reservations are an option of choice.

c) Convertible reservations can only be traded for reservations of equal or greater value

This is a key consideration. Whilst it is possible to trade a larger instance type or family for a smaller instance type or family, the conversion will require you to purchase the smaller reservation type in numbers equating to an equal or higher value than the cost of the original reservation. In addition, there will be a true-up cost if the traded reservations have a higher value than your current reservations. In short, your total commitment to spend over the three year term of the reservations can only stay the same or increase.


What does this mean for my reservation planning?

Clearly there are a lot of new variables in the mix (and rest assured that the team at Cloudreach is busy crunching the numbers and working with our partners to determine what the best new options are for any given circumstance) but, at a very high level, the new convertible instance types would seem to fit best for a customer who is committed to maintaining or increasing their presence in AWS over a 3 year term, but are not in a position to tie down their workload capacity requirements for a minimum of 12 months.

Feel free to contact the team if you have any questions on this, and we look forward to bringing you further analysis on these exciting new developments in the near future.