AWS Savings Plans

Get introduced to the AWS Savings Plans service and learn about saving costs and tailoring a plan best suited to your AWS accounts.

Imagine we’re working for a large enterprise that’s rapidly growing and has an increasing usage and requirement for AWS resources. With such higher usage, the AWS accounts will incur a much higher cost.

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The AWS Savings Plans service, which falls under the umbrella of the AWS Billing and Cost Management service, can be useful in lowering costs by setting up savings plans.

Introduction to Savings Plans

The AWS Savings Plans service is essentially a flexible pricing model from AWS that offers comparatively lower costs than On-Demand pricing. This reduced pricing is offered in exchange for a specific usage commitment over a one or three-year period.

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We can choose different payment options for AWS services when using AWS Savings Plans:

  • All upfront: Pay the entire commitment upfront for the biggest discount.

  • Partial upfront: Pay a portion upfront and the rest in monthly installments.

  • No upfront: No upfront payment, but commit to a fixed monthly payment for the term of the plan.

Savings Plans types

There are three types of savings plans offered by AWS:

  • Compute Savings Plans: Compute Savings Plans provide the most flexibility and apply to any EC2 instance regardless of region, instance family, operating system, or tenancy. They also apply to AWS Fargate and AWS Lambda usage.

  • EC2 Instance Savings Plans: These plans apply to a specific EC2 instance family within a region and offer a lower price than Compute Savings Plans. We have to commit to using individual instance families in a region, but we still have the flexibility to change instance size, OS, and tenancy.

  • SageMaker Savings Plans: SageMaker Savings Plans are specifically designed for AWS SageMaker service. These plans provide savings over on-demand pricing for SageMaker usage. Users commit to a certain amount of usage per hour for SageMaker services.

How the AWS Savings Plans service works

The AWS Savings Plans service allows users to commit to a specific amount of usage over a 1 or 3-year period in exchange for lower rates than on-demand pricing. Here’s how we can go about using the AWS Savings Plans service:

  • Choose an AWS Savings Plan type: We first select from Compute Savings Plans, EC2 Instance Savings Plans, or SageMaker Savings Plans, depending on their usage needs.

  • Select commitment term: We commit to a 1-year or 3-year term, with longer terms generally offering greater savings. Note that we cannot change the commitment term after the purchase.

  • Determine usage commitment: We commit to a consistent amount of usage, which is charged throughout the term, regardless of actual usage.

  • Automatic application: The discount is automatically applied to the user’s usage of eligible services up to the committed amount.

In exchange for this commitment, AWS provides a discounted rate for the usage up to the committed amount.

Use case

Here are some use cases of the AWS Savings Plans service:

  • AWS Savings Plans can be used to get discounted rates for the AWS EC2, AWS Fargate, AWS Lambda, and AWS SageMaker services provided we have steady usage of the resources of these services.

  • AWS Savings Plans can be used to reduce costs for moving our workloads to newer instances for AWS Lambda and AWS Fargate, modernizing applications at a reduced cost.

  • AWS Savings Plans can be used to apply saving plans across AWS Organizations even if it’s purchased for a single AWS account.


This lesson taught us about using savings plans to reduce AWS costs with the help of the AWS Savings Plans service.

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