AWS for DevOps — Pricing Models

14.1 — Pricing Models

AWS offers multiple pricing models. Understanding them is the foundation of cost optimization.

Real-World Analogy

Think of AWS pricing like renting a car:

• On-Demand = taxi (pay per ride, most expensive, most flexible)
• Reserved = monthly lease (commit to 1-3 years, big discount)
• Savings Plans = fuel discount card (commit to spending $X/hour, flexible on vehicle type)
• Spot = standby flight (cheapest, but you might get bumped)

The Four EC2 Pricing Models

Model	Discount	Commitment	Interruption	Best For
On-Demand	0% (baseline)	None	No	Unpredictable workloads, dev/test
Reserved (1 yr)	~30-40%	1 year	No	Steady-state production
Reserved (3 yr)	~50-60%	3 years	No	Long-term databases
Savings Plans	~20-30%	$/hour for 1-3 yr	No	Flexible, multiple instance types
Spot	~60-90%	None	Yes (2 min warning)	Batch jobs, CI/CD, stateless

Pricing Example: m5.xlarge in ap-south-1

Model	Hourly Rate	Monthly (730 hrs)	Annual	Savings
On-Demand	$0.192	$140	$1,682	—
Reserved (1 yr, no upfront)	$0.124	$91	$1,086	35%
Reserved (1 yr, all upfront)	$0.114	$83	$999	41%
Savings Plan (1 yr)	$0.137	$100	$1,201	29%
Spot (typical)	$0.058	$42	$508	70%

Beyond EC2: Other Service Pricing

Service	Pricing Model	Key Cost Drivers
S3	Per GB stored + per request	Storage class, request count
RDS	Instance hours + storage	Instance size, multi-AZ, storage IOPS
Lambda	Per request + per GB-second	Invocation count, memory, duration
Data Transfer	Per GB out of AWS	Cross-region, internet egress
NAT Gateway	Per hour + per GB processed	Data flowing through NAT
CloudWatch	Per metric/alarm/log GB	Custom metrics, log ingestion

The Hidden Costs

Cost	Easy to Miss	Typical Monthly
NAT Gateway data processing	$0.045/GB	$50-500
Data transfer between AZs	$0.01/GB	$10-100
Idle Elastic IPs	$3.65/IP/month	$4-40
Unattached EBS volumes	Varies by size	$10-200
Stopped EC2 with EBS	EBS still charges	$10-100
CloudWatch detailed monitoring	$0.30/metric/month	$5-50

Common Mistakes

Mistake	Why It Hurts	Fix
Using On-Demand for everything	Paying full price	Commit with Reserved/Savings Plans
Not tracking data transfer costs	Surprise bills	Monitor NAT Gateway and cross-AZ transfer
Forgetting about stopped resources	Still paying for EBS, EIPs	Terminate what you don’t need
Choosing the wrong storage class	Paying premium for infrequent data	Use S3 Intelligent-Tiering

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