Since AWS pioneered Lambda, the decision between EC2 and Lambda was about a simple trade-off: Flexibility & Cost (EC2) vs. Simplicity & Speed (Lambda).
If you had a high-throughput, steady-state workload, you likely had to use containers or EC2 to save money, sacrificing the features of Lambda and the serverless architectures.
That era ends now. With the launch of AWS Lambda Managed Instances, AWS has given us the missing link: the ability to run Lambda functions on specific EC2 infrastructure that we select, but they manage.
What is Lambda Managed Instances?
This is a new deployment model where your function code runs on fleet instances that are provisioned for your account.
What has changed?
- EC2 Pricing Models: You can apply Compute Savings Plans and Reserved Instances to your Lambda workloads, unlocking discounts of up to 72%.
- No Duration Charges: You stop paying for "GB/seconds." instead, you pay for the underlying instance capacity + a management fee (15% premium on the EC2 on-demand instance price)
- Multi-Concurrency: Unlike standard Lambda, where 1 Event = 1 invocation, Managed Instances support true multi-threading. A single instance can handle multiple concurrent requests, which maximize the CPU utilization.
Let’s look at a practical scenario where this feature can improve the cost while enjoying Lambda features.
You run a Real-Time Log Ingestion Service.
- The traffic is steady stream of data, 24/7.
- The volume is 50 Million requests per month.
- I/O heavy worload (validating JSON, writing to Kinesis/DynamoDB).
- The execution time: Average is 200ms.
- The required memory is 1024 MB.
Option A: Standard AWS Lambda
In the standard model, you pay for every millisecond the code runs.
- Requests: 50,000,000
- Duration: 200ms @ 1024MB
- Compute Cost: ~$166.00 (approx. based on standard x86 pricing)
- Request Cost: $10.00
- Total Monthly Cost: ~$176.00 While $176 isn't huge, imagine this at enterprise scale (500M or 5B requests). The linear scaling hurts.
Option B: Lambda Managed Instances
Now, let's switch to Managed Instances. Since the workload is I/O bound, we can leverage multi-concurrency. We don't need a new container for every request; we just need enough threads.
We choose 2x c7g.large (Graviton) instances to handle the baseline load with high availability.
- Instance Cost: c7g.large (approx $0.07/hr On-Demand).
- $0.07 x 2 instances x 730 hours = $102.20
- Management Fee: AWS charges a ~15% fee on the On-Demand instance price for managing the fleet.
- 15% of $102.20 = $15.33
- Request Cost: Standard $0.20 per million.
- 50M x $0.20 = $10.00
- Total Monthly Cost (On-Demand): $127.53
Wait, it gets better.
Because these are standard EC2 instances under the hood, we can apply a Compute Savings Plan (1-year, No Upfront). Graviton instances often see ~30-40% savings here.
- Discounted Instance Cost: ~$65.00
- Management Fee: Remains ~$15.33.
- Request Cost: $10.00
- Total Monthly Cost (Savings Plan): ~$90.33
The Result
- Standard Lambda: $176.00
- Managed Instances (Savings Plan): $90.33
- Total Savings: ~48%
When to use which?
| Feature | Standard Lambda | Lambda Managed Instances |
|---|---|---|
| Traffic Pattern | Spiky, Unpredictable, "Scale to Zero" | Steady-state, Predictable, High-Volume |
| Billing | Per Millisecond (Duration) | Per Instance Hour (Capacity) |
| Concurrency | 1 Request per Execution Environment | Multi-threaded (Many requests per instance |
| Best For | APIs, Cron jobs, Event triggers | Data streams, High-throughput APIs, Batch processing |
Summary
AWS Lambda Managed Instances is not a replacement for standard Lambda; it is an evolution for mature workloads. If the use case is suitable, It allows us to evolve our high-volume serverless functions to a more cost-effective model without rewriting them for containers.
Have you used Lambda Managed Instances, tell us in the comments if you find it cheaper for your workload!
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