Amazon Elastic Compute Cloud (Amazon EC2) is a web service that provides secure, resizable compute capacity in the cloud.You can select from a variety of operating systems and resource configurations like memory, CPU, storage that is required for your application. Amazon EC2 enables you to obtain and configure capacity within minutes. You can use one or hundreds or even thousands of server instances simultaneously. Some of the considerations for estimating Amazon EC2 cost are Operating systems, Clock hours of server time, Pricing Model, Instance type and Number of instances.
Users can pay only for what they are using according to per-second billing. so, This EC2 per-second billing will helps the users to remove the cost of the unused minutes and also seconds from the user’s bill.
Pricing models for Amazon EC2:
There are four pricing models for Amazon EC2 instances: On-Demand Instances, Reserved Instances, Spot Instances, and Dedicated Hosts.
- On-Demand Instances:
In this model, based on the instances you choose, you pay for compute capacity per hour or per second (only for Linux Instances) and no upfront payments are needed. You can increase or decrease your compute capacity to meet the demands of your application and only pay for the instance you use. This model is suitable for developing/testing application with short-term or unpredictable workloads. On-Demand Instances is recommended for users who prefer low cost and flexible EC2 Instances without upfront payments or long-term commitments. Depending on the demands of your application Users can also increase or decrease their compute capacity. - Spot Instances:
Amazon EC2 Spot Instances is unused EC2 capacity in the AWS cloud. Spot Instances are available at up to a 90% discount compared to On-Demand prices. The Spot price of Amazon EC2 spot Instances fluctuates periodically based on supply and demand. It supports both per hour and per second (only for Linux Instances) billing schemes. Applications that have flexible start and end times and users with urgent computing needs for large scale dynamic workload can choose Amazon EC2 spot Instances. Spot Instances is very best for the applications that are very feasible and having very low compute prices and also for the applications which have flexible start and end times. - Reserved Instances:
Amazon EC2 Reserved Instances provide you with a discount up to 75% compared to On-Demand Instance pricing. It also provides capacity reservation when used in specific Availability Zone. For applications that have predictable workload, Reserved Instances can provide sufficient savings compared to On-Demand Instances. The predictability of usage ensures compute capacity is available when needed. Customers can commit to using EC2 over a 1- or 3-year term to reduce their total computing costs. It has very flexible pricing model which offers low prices on EC2. - Dedicated Hosts:
A Dedicated Host is a physical EC2 server dedicated for your use. Dedicated Hosts can help you reduce costs by allowing you to use your existing server-bound software licenses like Windows server, SQL server etc. and also helps you to meet the compliance requirements .Customers who choose Dedicated Hosts have to pay the On-Demand price for every hour the host is active in the account. It supports only per-hour billing and does not support per-second billing scheme. The Dedicated Host is something physical EC2 server which is dedicated for the use of user.
Per-second billing scheme:
Today, many customers use Amazon EC2 to do a lot of work in a short time, sometimes minutes or even seconds. In 2017, AWS announced per-second billing for usage of Linux instances across On-Demand, Reserved, and Spot Instances. The minimum unit of time that will be charged is a minute (60 seconds ), but after your first minute of time, it is charged for seconds. However if you start then stop an instance in 30 seconds, you will be charged the 60 seconds not 30.
This Per-second billing is available for all the instances launched in:
- On-Demand Instances
- Reserved Instances
- Spot instances
- All regions
- All Availability Zones
- Amazon Linux
- Windows
- Ubuntu
Last Updated : 28 Mar, 2023
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FAQs
Pricing models for Amazon EC2. There are four ways to pay for Amazon EC2 instances: On-Demand Instances, Savings Plans, Spot Instances, and Reserved Instances (RIs).
Which pricing model should you use for EC2 instances? ›
On-Demand
On-Demand instances are one of the most flexible and straightforward pricing options Amazon EC2 provides. They allow users to run instances (virtual servers) without any long-term commitments or upfront payments. Unlike some other pricing models, on-demand instances don't require upfront payment.
Which Amazon EC2 pricing model is the most? ›
Dedicated Host Pricing
In other words, you do not have to share the server with other users, as you would with other types of EC2 instances. In general, dedicated host pricing is the most expensive type of EC2 pricing model.
What is the pricing model of AWS? ›
AWS pricing is similar to how you pay for utilities like water and electricity. You only pay for the services you consume, and once you stop using them, there are no additional costs or termination fees.
What are the three pricing models? ›
The three most common pricing strategies are:
- Value based pricing - Price based on it's perceived worth.
- Competitor based pricing - Price based on competitors pricing.
- Cost plus pricing - Price based on cost of goods or services plus a markup.
7 types of pricing models
- Cost-plus pricing model.
- Value-based pricing model.
- Hourly pricing model.
- Fixed pricing model.
- Equity pricing model.
- Performance-based pricing model.
- Retainer pricing model.
Amazon EC2 Pricing FAQs
It depends on what billing method you select and other factors, such as the instance type, instance size, operating system, tenancy model, region, and availability zone, as well as whether you use load balancing.
Which pricing model is the most expensive? ›
Three-tier pricing
The Professional tier is more expensive and offers more features or a higher level of service. The Business tier is the most expensive and is designed for customers with the most complex needs. Three-tier pricing works well when you want to appeal to three customer personas simultaneously.
What is the cheapest EC2 instance type? ›
With On-Demand Instance prices starting at $0.0058 per hour, T2 instances are one of the lowest-cost Amazon EC2 instance options and are ideal for a variety of general-purpose applications like micro-services, low-latency interactive applications, small and medium databases, virtual desktops, development, build and ...
Which AWS EC2 pricing model is eligible for AWS free tier? ›
AWS Free Tier
This includes 750 hours of Linux and Windows t2.micro instances (t3.micro for the regions in which t2.micro is unavailable), each month for one year. To stay within the Free Tier, use only EC2 Micro instances.
Understand the fundamentals of pricing
There are three fundamental drivers of cost with AWS: compute, storage, and outbound data transfer. These characteristics vary somewhat, depending on the AWS product and pricing model you choose.
Which pricing model lets you pay only for what you use? ›
Using a cloud provider like AWS gives you the flexibility to access the services you need - when you need them, only paying for what you actually use. AWS gives you the ability to adjust services to align them with your business and reduce costs.
Which pricing plan should you choose? ›
Choose a plan that aligns with your budget, goals, and customers. Ensure it accommodates your business model and scalability requirements. Here's a breakdown of how to make that match: Basic Plan: Choose this plan if you're a new or small business on a tight budget.
Which types of pricing policies does AWS offer choose two? ›
Savings Plans
- Compute Savings Plans – This type provides the most flexibility and helps reduce your costs by up to 66%. ...
- EC2 Instance Savings Plans – This type provides the lowest prices, offering savings up to 72% in exchange for commitment to usage of individual EC2 instance families in a single AWS Region.
Cloud Computing Pricing models have been broadly classified as: Pay-as-Use, Subscription Based, Hybrid pricing model. But specifically various cloud computing providers have classified the pricing models differently. Like Amazon uses: On-Demand Instance, Spot Pricing Instances and Reserved Instances [11].
Which Amazon EC2 instance pricing model can provide discounts of 22 up to 90 %? ›
Amazon EC2 Spot Instances let you take advantage of unused EC2 capacity in the Amazon Web Services cloud. Spot Instances are available at up to a 90% discount compared to On-Demand prices.
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