‍How Using AWS Compute Savings Plan Cuts Your AWS Cost 

‍Managing cloud costs can be complex, especially when unpredictable compute usage leads to skyrocketing expenses. Without a strategic approach, businesses may pay for underutilized resources or face budget overruns. To address this concern, the AWS compute savings plan is a great solution. But how?  This article explores the various aspects of the AWS compute savings plan and how to use it optimally.

According to Gartner, organizations worldwide spend over $725 billion on cloud services. This massive investment highlights the growing reliance on cloud services like AWS. But with great investment comes the need for smart management. To avoid letting your cloud spending get out of your control, deploying solutions like AWS compute savings plans is crucial. These plans ensure you get the most out of every dollar without draining your budget. Moreover, it allows organizations to significantly reduce costs while retaining the flexibility to scale and adapt to changing compute demands. But what are AWS compute savings plans? .

Understanding AWS Compute Savings Plan

Designed to provide savings on Amazon's computing services, the AWS compute savings plan can reduce your costs by up to 66% compared to on-demand pricing​​. 

AWS compute savings plans offer unmatched flexibility. These plans automatically apply to any EC2 instance usage, regardless of the instance family, size, Availability Zone, region, OS, or tenancy. This plan applies to your Amazon EC2 instances, AWS Fargate, and AWS Lambda usage​.

With AWS compute savings plans, you can switch from C4 to M5 instances and move workloads from one region to another. For instance, you can transition from EC2 Lambda to Fargate without losing your savings. 

You can also easily move between regions, for example, from the US Northeast to the US Southeast. This adaptability ensures that you continue to benefit from discounted rates, no matter how much your computing needs change.

In the AWS compute savings plan, you must commit to consistent usage. This usage is measured in dollars per hour over a one—or three-year term. You can still run your workloads if your AWS compute savings plan expires. However, the usual on-demand price will be applied to the services after this threshold.

Key Features of AWS Compute Savings Plan

AWS compute savings plans come with several key features designed to provide cost savings and flexibility. Here’s a breakdown of their main aspects:

• Flexibility Across Services: As mentioned above, the AWS compute savings plan automatically applies to different services, like EC2 instances. You continue to enjoy the benefits of your saving plans even when you change between instances or switch services. 
• No Restrictions on Instance Type or Region: Unlike Reserved Instances, AWS compute savings plans do not tie you to specific instance types or regions. This means you can adjust your usage freely, whether moving workloads across different instance families or scaling up and down in various regions​​.
• Commitment Flexibility: You can commit to consistent hourly spending over a one- or three-year term. This commitment is straightforward, making forecasting and managing your cloud expenses easy​​.
• Automatic Application of Discounts: Once you have a savings plan, AWS automatically applies the discount to your compute usage. This process is seamless, reducing your bills without requiring manual adjustments​​.
• Savings on Steady-State Usage: AWS compute savings plans are ideal for steady-state usage. They help optimize costs for consistent workloads, providing significant savings compared to On-Demand pricing​​.
• Easy Management: Managing an AWS Compute savings plan is straightforward. AWS provides detailed billing and cost management tools to track usage and savings. The AWS Cost Explorer helps visualize your savings and predict future usage, aiding in better financial planning and budgeting.​ 

Now that you understand the key features of the AWS Compute savings plan, let's examine how it differs from other AWS savings options. 

Difference Between Compute Savings Plan & Other AWS Savings Options

In addition to the AWS compute savings plan, Amazon offers two other savings plans: EC2 Instance and SageMaker.

EC2 Instance Savings Plan is more specific than Compute Savings Plans. They also require a one- or three-year commitment but focus exclusively on EC2 instances. This plan offers lower prices than On-Demand rates and is ideal for predictable workloads. It is flexible within a specific instance family in a region but does not extend to other services like Lambda or Fargate. EC2 Instance savings plans are meant for businesses with stable, predictable instance usage patterns.

Amazon SageMaker is a managed service specifically for building, training, and deploying machine learning models. It provides built-in algorithms, tools, and frameworks to simplify ML workflows. Unlike Compute and EC2 Instance savings plans, SageMaker is a service rather than a cost-saving plan. It integrates with various AWS services to support end-to-end machine learning tasks but requires separate pricing and cost management.

Below is a table highlighting the distinction between the three savings plans.

Let us also examine how the AWS compute savings plan differs from Reserved Instances.

Difference Between Compute Savings Plan & Reserved Instance

AWS offers both Compute Savings Plans and Reserved Instances as cost-saving options for users, but they differ significantly in terms of flexibility and pricing structures.

Reserved Instances (RIs) provide a discount for committing to use a particular instance type in a specific Availability Zone for a one- or three-year term. RIs offer up to 75% savings compared to On-Demand pricing but lack the flexibility of Compute Savings Plans. They are best suited for predictable workloads where the instance type and region do not change frequently.

Key Takeaways

• AWS compute savings plan is ideal for dynamic workloads that may change over time because of their multiple service adaptability and flexibility. 
• Reserved Instances provide the highest potential savings. The are best suited for predictable, stable workload that do not require changing instance types or regions frequently.

How to Get Started With AWS Compute Savings Plan?

To take advantage of AWS compute savings plan, an AWS account is required. It's also important to analyze your current and projected usage patterns to choose the right commitment level and duration. Consider your application's scaling needs and potential changes in your workload to ensure that your commitment accurately reflects your future usage.

Following is the step-by-step guide to how you can purchase an AWS compute savings plan:

• Log in to AWS Cost Explorer: First, access your AWS account settings and permissions in AWS Cost Explorer and enable them.
• Navigate to Savings Plans: In the navigation pane, choose "savings plans" under the "billing and cost management" section.
• Choose a Plan: Based on your workload requirements, select between a compute savings plan and an EC2 instance savings plan.
• Set Commitment Duration and Amount: Specify the commitment duration (one or three years) and the hourly commitment amount. The commitment can be as low as $0.001 per hour.
• Review and Purchase: Carefully review your selections and confirm the purchase. Once activated, your AWS compute savings plan will automatically apply the discounted rates to your eligible usage.

Choosing the Right Commitment Duration and Amount

When selecting the duration and commitment amount, aligning these with your business's anticipated cloud usage is crucial. 

A one-year plan offers flexibility with a lower commitment period, while a three-year plan provides deeper discounts. Assess your current cloud spending and forecasted growth to determine an appropriate hourly commitment. Tools like AWS Cost Explorer can help analyze past usage patterns to make an informed decision.

Strategies for Maximizing Savings in AWS

AWS offers several strategies to help organizations effectively reduce their cloud computing costs. Businesses can maximize their savings by assessing workloads, combining cost optimization strategies, and utilizing monitoring tools. 

1. Assessing Your Workloads

Begin by analyzing your current and future workload requirements. Identify which workloads are suitable for a Compute savings plan. 

• This involves determining if your workloads are stable and predictable, making them ideal for Compute savings plan. 
• These plans are also best for consistent and long-term workloads. If your computing demands span a range of services and instance types, the AWS compute savings plan offers a unified and adaptable approach to achieving cost savings across various resources.

2. Monitoring Savings Plans

Continuous monitoring and adjustment of AWS Compute and other savings plans are crucial for maximizing savings. AWS provides tools like AWS Cost Explorer and AWS Budgets to track your usage and spending. 

• Monitoring ensures that the savings plan optimally covers your on-demand instances, maximizing your potential discounts. 
• Additionally, it helps identify discrepancies or excess usage compared to your commitment levels. These tools help you understand your utilization and ensure that your commitments align with your actual usage.

3. Adjusting Commitments

Regularly reviewing and adjusting your commitments based on changes in your needs can prevent over- or under-provisioning. This ensures that you always get the best value from your savings plan in general and the AWS compute savings plan in particular. 

• Dynamic Adjustments: Revisit your Savings Plans and Reserved Instances commitments regularly to ensure they align with your actual usage. Adjustments might include changing the instance family, size, or region based on evolving requirements.
• Utilizing Reports: AWS provides various reports and dashboards that help you track and manage your commitments. Also, check on AWS usage and cost reports to do optimal cost management.​ 

4. Use Other AWS Cost Management tools along with AWS saving plans

AWS has numerous tools designed to help you manage and optimize your cloud spending effectively. These tools are essential for forecasting and budgeting, conducting thorough spending analysis, and detecting cost anomalies. They enable users to manage their cloud budgets efficiently, uncover cost-saving opportunities, and make informed financial decisions. 

Use these tools along with the AWS saving plans to maximize benefits and save costs.

Some of the key AWS cost management tools are:

• AWS Cost Explorer: AWS Cost Explorer provides detailed insights into your AWS spending and usage patterns. It allows users to visualize their usage and cost through easy-to-understand graphs, helping to identify cost drivers and forecast future spending. By drilling down into the data, you can uncover trends and make more informed decisions about your cloud budget​​.
• AWS Budgets: AWS Budgets lets you create customized budgets that alert you when your costs or usage exceed predefined thresholds. This tool proactively manages expenses by setting limits and sending notifications, which helps prevent unexpected charges. It’s particularly useful for keeping your spending in check and ensuring that you stay within budget​​.
• AWS Pricing Calculator: The AWS Pricing Calculator helps estimate your projected AWS costs by allowing you to model your solutions before implementation. It aids in budget planning by configuring services based on your financial constraints and evaluating the financial impact of various AWS setups. This tool is invaluable for making more informed decisions and planning your AWS expenses​​.
• AWS Cost Optimization Hub: This hub offers a centralized location for tips and best practices on reducing wasteful spending across your AWS environment. It consolidates findings from various AWS cost management tools, providing actionable intelligence to help you optimize your cloud spending​.
• AWS Cost Anomaly Detection: Leveraging machine learning, AWS Cost Anomaly Detection identifies unusual spikes in your AWS spending. It alerts you to significant changes in spending patterns, allowing you to investigate and address issues before they escalate into major cost overruns. This early detection can save you from unexpected financial surprises​​.

5. Use Other Strategies for Maximizing Savings on AWS

There are a few more optimization strategies that you can use to maximize savings on AWS. 

Also Read: You can read our article on AWS Cost Optimization Tools to discover more about the topic. 

• Select the Right AWS Region: Choosing the appropriate AWS region is crucial for cost-effectiveness, performance, and compliance. AWS service pricing varies by region, so comparing costs using tools like the AWS Pricing Calculator is essential.
  Additionally, selecting a region closer to your user base can reduce latency, improving the user experience. It's also important to ensure the availability of required services in your chosen region​​.

• Right-Size Your Instances: Right-sizing your instances is key to avoiding overprovisioning and paying only for the resources you use. AWS Compute Optimizer analyzes performance and usage data to recommend optimal instance sizes, leading to significant cost savings. Regularly reviewing and adjusting instance sizes ensures that you meet your current workload requirements without overspending​.

• Implement Auto-Scaling Policies: Auto-scaling dynamically adjusts computing resources to meet workload demands, scaling up during peak times and down during lulls. AWS Auto Scaling services can automatically modify the number of EC2 instances, ECS jobs, and more based on predefined policies, helping to maintain performance while controlling costs​.

• Utilize Elastic Load Balancing: Elastic Load Balancing (ELB) distributes incoming traffic across multiple targets, ensuring no single resource becomes a bottleneck. By routing client requests efficiently, ELB improves resource utilization and application fault tolerance. Integrating ELB with auto-scaling policies enhances resource efficiency and cost-effectiveness by adjusting server fleets based on traffic levels​.

• Identify and Remove Underutilized EC2 Instances: Regularly monitor your EC2 instances for underutilization to avoid unnecessary spending. Tools like AWS Trusted Advisor and AWS Compute Optimizer provide insights into instance performance, helping you identify and eliminate idle resources. This optimization ensures funds are allocated to areas that need scaling or enhancement​ ​.

• Consider EC2 Spot Instances: EC2 Spot Instances offer a cost-effective solution for running flexible workloads at a fraction of the cost of On-Demand instances. By bidding on spare computing capacity, you can achieve significant savings. Spot Instances are ideal for workloads that can tolerate interruptions and have flexible start and end times​.
  By leveraging these AWS cost management tools and strategies, you can effectively optimize your cloud spending, ensuring better budget management and cost efficiency.

• Use Cloud Storage Optimization Tools Like Lucidity: Another useful strategy is to leverage cloud block storage optimization solutions like Lucidity. These solutions can help reduce costs associated with storage by automatically managing and optimizing your storage usage. We will discuss this in more detail in the next section.

Also Read: Apart from all the above-mentioned tips, read AWS Cost Optimization Best Practices to ensure optimal cloud storage usage.

How Does Lucidity Help Maximize Savings on AWS?

In this section, we will explore how Lucidity helps maximize savings on AWS and optimizes AWS cloud costs. Many businesses find it confusing to use the AWS compute savings plan or any other AWS savings plan optimally. Cloud cost management tools like Lucidity can simplify this process and make it as easy as clicking a button. 

Also Read: How Lucidity helps optimize your EBS's cost (Elastic Block Storage). You can also refer to this handy AWS Cost Optimization Checklist.

Choosing between different saving plans and managing the cloud environment effectively using numerous optimization strategies is challenging. Savings plans like AWS Compute savings might need you to navigate across various associated problems. 

For instance, your AWS compute savings plan has a long-term contract that spans more than a year. This may not align with fluctuating business needs, risking over- or under-provisioning.

Most businesses are not accustomed to resizing instances, adjusting commitments, monitoring their savings plan, accessing their workloads, etc. Moreover, doing this takes their focus away from their main business objectives. 

Lucidity's Automated Storage Management & Assessment Helps Maximize AWS savings

Lucidity also offers an intelligent, automated solution that eradicates problems associated with AWS savings plans, such as under and overprovisioning, resizing, assessing, monitoring, scaling, etc. 

Lucidity Storage Audit automates the process of assessing and auditing your storage usage, providing significant benefits. It provides a detailed storage audit and identifies volumes, sizes, performance characteristics, and unattached volumes. It also suggests taking snapshots before terminating unused volumes to save data on S3 at a lower cost. It helps shrink EBS volumes when needed.

Such assessments and audits help you get over the risks of over or under-provisioning. With everything at your fingertips at the click of a button, you can make complex choices, understand your commitment, and choose the right savings plan. For instance you can decide and predict easily if AWS Compute saving plan is ideal for your business.

Lucidity's Innovative Intelligent Auto-Scaling

Lucidity Auto-scaler fundamentally revolutionizes cloud storage management. The core concept of auto-scaling is listed below:

• Continuous Monitoring: Lucidity continuously analyzes your storage usage patterns, gathering real-time metrics to understand actual needs.
• Real-Time Right-Sizing: Lucidity’s algorithms make intelligent decisions on when to scale storage up or down. If usage increases, it expands storage capacity to ensure resources are available. When usage drops, storage allocation shrinks to eliminate waste.
• Zero Downtime: Scaling adjustments occur without any disruption to applications or data, ensuring consistent performance and a seamless user experience.

Also Read: Discover more about AWS Storage Auto Scaling Best Practices HERE.

Cut Your AWS Storage Cost With AWS Compute Savings Plan

AWS compute savings plan is one of Amazon Web Services (AWS) savings plans. It offers a flexible and cost-effective solution for managing your AWS compute resources and reducing your AWS cost. These plans provide significant discounts, up to 66%, compared to On-Demand pricing. They allow you to commit to a consistent amount of computing usage over one or three years. 

Unlike Reserved Instances, AWS compute savings plan automatically apply to any EC2 instance. This happens irrespective of instance family, size, region, operating system, or tenancy, providing unparalleled flexibility. This flexibility extends to AWS services like Fargate and Lambda. Consequently it enables seamless transitions between different compute options while still benefiting from reduced costs. 

You can optimize resource usage, and maintain operational agility with AWS compute savings plan. Although it’s a highly recommended strategy for efficient cloud cost management, many businesses fail to leverage it. Optimizing your AWS compute savings plan usage with the help of cloud storage management tools like Lucidity enhances its efficiency. By leveraging Compute Savings Plans, your business can achieve substantial savings and reduce your cloud cost.