On-Demand and Reserved Instances are two pricing models for Amazon Elastic Compute Cloud (EC2) instances you can provision in the AWS cloud. Functionally, both types are the same. You can choose from several different compute and memory configurations for different workloads. The difference exists only in pricing. With On-Demand Instances, you pay for computing capacity by the hour or second (with a minimum of 60 seconds) with no long-term commitment. You pay only for what you use, and the instance automatically scales up or down with changing workloads. In contrast, Reserved Instances provide a discounted rate and an optional capacity reservation for your instances. You rent the Reserved Instance for a fixed period at a lower per-second or per-hour rate than the equivalent On-Demand Instance. Spot Instances provide an additional instance pricing model with strict conditions.","sortDate":"2023-12-06","headlineUrl":"https://aws.amazon.com/compare/the-difference-between-on-demand-instances-and-reserved-instances/?trk=faq_card","id":"faq-hub#what-is-the-difference-between-on-demand-instances-and-reserved-instances","category":"Compute","primaryCTA":"https://portal.aws.amazon.com/gp/aws/developer/registration/index.html?pg=compare_header","headline":"What’s the Difference Between On-Demand Instances and Reserved Instances?"},"metadata":{"tags":[{"id":"GLOBAL#tech-category#compute","name":"Compute","namespaceId":"GLOBAL#tech-category","description":"Compute","metadata":{}},{"id":"faq-hub#faq-type#compare","name":"compare","namespaceId":"faq-hub#faq-type","description":"
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On-Demand and Reserved Instances are two pricing models for Amazon Elastic Compute Cloud (EC2) instances you can provision in the AWS cloud. Functionally, both types are the same. You can choose from several different compute and memory configurations for different workloads. The difference exists only in pricing. With On-Demand Instances, you pay for computing capacity by the hour or second (with a minimum of 60 seconds) with no long-term commitment. You pay only for what you use, and the instance automatically scales up or down with changing workloads. In contrast, Reserved Instances provide a discounted rate and an optional capacity reservation for your instances. You rent the Reserved Instance for a fixed period at a lower per-second or per-hour rate than the equivalent On-Demand Instance. Spot Instances provide an additional instance pricing model with strict conditions.","id":"seo-faq-pairs#difference-between-on-demand-instances-and-reserved-instances","customSort":"1"},"metadata":{"tags":[{"id":"seo-faq-pairs#faq-collections#on-demand-instances-vs-reserved-instances","name":"on-demand-instances-vs-reserved-instances","namespaceId":"seo-faq-pairs#faq-collections","description":" on-demand-instances-vs-reserved-instances","metadata":{}}]}},{"fields":{"faqQuestion":"Price difference: On-Demand Instance compared with Reserved Instance","faqAnswer":" On-Demand Instances and Reserved Instances offer different pricing models so that organizations can choose the most appropriate configuration based on their organizational consumption and needs. Configurations of EC2 instances are available with both Reserved and On-Demand pricing. \n A Reserved Instance requires a lock-in contract to reserve a full instance for a given time period of either one or three years. On-Demand Instances are billed in hours and seconds and require no lock-in period—they can be turned on or off at will. Compare this This is to renting a car park in the city for a year or on a daily rate. If you work full-time in the city, the yearly rate would be more cost-effective. If you work partly remote, the daily rate may make more sense. \n A Reserved Instance offers cost savings of up to 72% over On-Demand price. In addition, Reserved Instance three-year terms offer much greater savings over one-year terms. \n For the same instance type, an On-Demand Instance will always be more costly than Reserved if it is used at capacity for the full time period. For example, if you were to choose a c5d.4xlarge Linux instance with 16 vCPUs, 32 GB memory, and up to 10 Gb network, the On-Demand hourly cost would be 0.96c. Over three years at full capacity, this would equal $25,228.80 in On-Demand pricing. In contrast, the upfront cost for a Reserved Instance for three years is $9,224.28. Even if you only used the instance for half the time instead of its full capacity, you would still save over $3,000.00. \n Reserved Instance pricing is not based on use. The price is fixed and locked in. On-Demand Instance pricing is based on use—projected for an equivalent three-year period. \nSaving calculations \n
