AWS's Savings Plans and Reserved Instances can be good mechanisms to save money on your AWS bill, but the fact is that the majority of small businesses and startups avoid them. At the end of the day, the AWS Savings Plan is a bit of a misnomer. It's more accurately a "spending plan": you are promising AWS to spend a certain amount each month, and in return you'll get a discount.
But because you are committed to spending that every month for at least a year, that's much too big a commitment for most small companies to take on, especially if you aren't sure what your usage is going to look like in the next few months, let alone a year from now.
Our new AWS Savings Plan Finder is a free tool that lets you visually gauge whether a Savings Plan or Reserved Instance is going to work for you before you commit to anything.
The confusing bit: your commitment already includes the discount
The number you commit to with a Savings Plan is the discounted price, not what you're paying today. That's easy enough to work out for a Reserved Instance, where there's a single price with a single discount:
discountedPrice = currentPrice × (1 − discount)
So if you're spending $10 an hour on an instance and the reservation gives you a 20% discount, the discounted price is $8 an hour. If your usage is consistently $10 an hour, you should commit to $8 an hour.
What you're really looking for is a line on your usage graph that never goes above your normal usage. As soon as your usage dips below that line, you're paying for commitment you aren't using.
A single line item with steady usage: the commitment line sits right on top of it, so every dollar committed is a dollar used.
AWS doesn't show you this
AWS doesn't present Savings Plans or Reserved Instances this way, so you can't easily see whether the commitment you're about to buy actually matches your real usage. Its recommendations are also based on a small window — the last 30 days by default — so a quiet month or a one-off spike can skew the number it suggests.
So we decided to take a whole year of history and show you graphically what a Savings Plan would have looked like against it.
Savings Plans cover many line items, each with its own discount
For a Reserved Instance, converting from the discounted price back to the real price is just the formula above. A Savings Plan is harder, because it typically covers lots of different line items. A Database Savings Plan, for example, might cover DynamoDB, RDS, and OpenSearch, and each of those can have a different discount.
That makes finding the right commitment trickier. You need to assess each line item separately, then weight them correctly to get the total hourly commitment:
C_total = Σ (i = 1 to n) U_i × (1 − D_i)
where U_i is the on-demand usage for line item i and D_i is its discount. It's not rocket science, but it's also not something you're going to do in your head.
The Savings Plan Finder does this under the hood, so the graph shows where the undiscounted commitment sits relative to your actual usage. You can judge at a glance whether it looks sensible:
- If your usage is shrinking, you definitely shouldn't get yourself into a commitment.
- If your usage is very variable, commit to a low level that safely covers your base load.
Many line items stacked over a year of history. Usage stepped up in August, and the recommended commitment is sized against that recent level while still sitting under actual usage.
A recommendation you won't regret
The Finder recommends a safe level of commitment using a full year of historical data where it's available, and sizes the recommendation against your most recent usage. That way, if your usage has dropped recently, you won't be penalised for a level of spend you no longer have.
That should let you decide whether Savings Plans or Reserved Instances could save you money, without making a commitment you'll regret later. It's free, needs no sign-in, and never buys anything on your behalf — upload an itemized AWS bill or connect a read-only IAM role and see where the line falls.
Try the AWS Savings Plan Finder against your own bill and see whether a commitment actually fits your usage.
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