AWS makes new upfront discount pricing play

Amazon Web Services has introduced a significant new discount pricing offer for users willing to commit to pre-determined levels of long-term IaaS usage.

The new “Savings Plans” match the discount offered by Reserved Instances, AWS’ offer to discount the price of its EC2 servers if you commit to use them for a fixed period of time.

Savings Plans differ by dropping price if you commit to   specific amount (measured in dollars per hour) of compute power over a one or three year period..

As Amazon’s Jeff Barr explained in the post announcing the new offer, “Every type of compute usage has an On Demand price and a (lower) Savings Plan price. After you commit to a specific amount of compute usage per hour, all usage up to that amount will be covered by the Saving Plan, and anything past it will be billed at the On Demand rate.”

Savings Plans come in two forms:

• Compute Savings Plansthat apply to any EC2 instance regardless of region, instance family, operating system, or tenancy.
• EC2 Instance Savings Planstied to a specific instance family within a region and provide the largest discount.

Users that commit to Savings Plans will need to commit to either one or three years of use.

Amazon’s Cost Explorer has been updated to include modelling for Savings Plans in addition to on-demand and Reserved Instances.

The new pricing appears to offer Amazon users greater flexibility by offering discounts that can apply to any instance type, whereas Reserved Instances are tied to one family of instances.

The new Savings Plans are billed monthly.

AWS has provided the table below to allow comparisons between Savings Plans and Reserved Instances.                                                                                              

Savings plans are available now across all AWS regions outside China,