Cloud Pricing Comparison: Reserved Instances vs Spot Instances
When it comes to cloud computing, one of the biggest concerns businesses have is the cost. Cloud providers offer a variety of pricing models, and two of the most popular ones are reserved and spot instances. At first glance, they may seem similar, but that’s where many businesses get it wrong. In this post, we’ll provide a factual and unbiased comparison between these two pricing models, with numbers to back up our claims.
What are Reserved Instances?
Reserved instances are virtual machines that you can purchase in advance. This model is ideal for businesses that know they will use a certain amount of computing power for an extended period. Reserved instances can be purchased in one, two, or three-year terms, and they offer significant discounts compared to on-demand instances.
For example, let’s take an m5.large EC2 instance on AWS. The on-demand hourly rate for this instance is $0.096, while the one-year reserved instance rate starts at $0.052 per hour, representing a 46% savings. If you purchase a three-year reserved instance, the rate drops to $0.039 per hour, a 60% savings.
What are Spot Instances?
Spot instances are virtual machines that are offered at a discounted price. However, the catch is that the availability of these instances is subject to demand and supply. When the demand for instances is low, you can get discounts of up to 90% compared to on-demand instances. But if the demand suddenly goes up, you risk having your instances terminated without notice.
For example, let’s say that the on-demand rate for an m5.large EC2 instance is $0.096 per hour, while the current spot price is $0.040 per hour. This represents a 58% discount on the on-demand rate. However, if the supply of instances suddenly drops, and the new spot price jumps to $1.00 per hour, you may have your instances terminated, which can be disastrous for critical workloads.
Reserved Instances vs Spot Instances: Which One is Better?
The answer to this question depends entirely on your business needs. If you have a workload that requires a large amount of computing power for an extended period, reserved instances can offer significant savings. This pricing model is ideal for workloads that are predictable and stable.
On the other hand, if you have workloads that are flexible and can tolerate interruptions, spot instances can offer significant savings. Spot instances are ideal for workloads that can be started and stopped without affecting the overall outcome.
Conclusion
Both reserved and spot instances are viable pricing models for cloud computing. Ultimately, the choice comes down to your business needs. If you have predictable workloads that require a large amount of computing power for an extended period, reserved instances can offer significant savings. On the other hand, if you have flexible workloads that can tolerate interruptions and can be stopped and started without affecting the overall outcome, spot instances can offer significant savings.
We hope this blog post has provided you with the information you need to make an informed decision when it comes to choosing between reserved and spot instances for your cloud computing needs.
References
- AWS. (n.d.). Amazon EC2 pricing. Retrieved from https://aws.amazon.com/ec2/pricing/.
- Google Cloud. (n.d.). Compute Engine pricing. Retrieved from https://cloud.google.com/compute/pricing.
- Microsoft Azure. (n.d.). Virtual Machines pricing. Retrieved from https://azure.microsoft.com/en-us/pricing/details/virtual-machines/.