Reserved instances are one of the most misused tools in AWS cost optimization
When used correctly they save 40 to 72 percent on compute costs compared to on-demand pricing
When used incorrectly they lock you into paying for capacity you don't use or capacity that's the wrong type
I've seen both. The second one is painful in a specific way because you made a decision with good intentions, paid upfront for a year or three years, and are now stuck watching a reserved instance sit unused while you also pay on-demand for the thing you actually need
Here's what makes reserved instances hard to get right
They require you to have accurate knowledge of your future workload. What instance types will you be running in twelve months? What size? In which region? For how long per day?
Most teams guess. The guess is based on what they're running today. But today's infrastructure is often not what the infrastructure looks like after you do the rightsizing work, after you finish that migration, after you add that new service that changes traffic patterns
This is why I say repeatedly: do the rightsizing first
After you've rightsized your instances and understood your actual usage patterns, reserved instances become a straightforward financial decision. You know what you're running. You know it's correctly sized. You know it's stable. Now you're just choosing whether to pay on-demand or commit to a discount
Compute Savings Plans are often a better starting point than reserved instances for most teams. They give you commitment-based discounts that apply flexibly across instance types and sizes, with less risk of being locked into the wrong specific configuration
Analyze your last 30 days of compute spend. Look at what's running consistently versus what varies. Commit to the consistent baseline. Leave the variable workload on on-demand or spot
The savings are real. The order of operations matters
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