RightScale Webinar: Decoding AWS Reserved Instances (RIs) What It Means for Cloud Pricing
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The document discusses AWS Reserved Instances (RIs), detailing their structure, pricing, and comparison with Google Cloud offerings. It emphasizes the commitment required for RIs to receive discounts ranging from 20% to 75%, changes in instance types, and the importance of understanding usage patterns for breakeven analysis. Additionally, it highlights the advantages of Google’s sustained-use discounts, which offer flexibility without commitments, and concludes with price comparisons between AWS and Google Cloud services.
RightScale Webinar: Decoding AWS Reserved Instances (RIs) What It Means for Cloud Pricing
- 2. • Hassan Hosseini • Product Manager, Cloud Analytics • Kim Weins • VP Marketing Speakers
- 3. • Understanding the New AWS Reserved Instances • Comparing AWS to Google • Breakeven Analysis • Factoring in Future Price Drops Agenda
- 4. What Happened • Quick recap: What is a Reserved Instance • A commitment from you to AWS to use a resource for a given period of time • For that commitment, you get a discounted price (between 20% - 75%) • You also get a capacity reservation • It is not a VM. It is not a dedicated machine. • What changed: • Light, Medium and Heavy RIs were discontinued (you could see it coming) • All Upfront, Partial Upfront and No Upfront RIs were introduced – discounts based on timing of payment • All the new RIs are billed 24 hours a day – regardless of whether they are used • What hasn’t changed: • You still have to commit to an instance type, platform (OS), and Availability Zone • You can request modifications to move AZs or change instance sizes within a family • Terms are 1 and 3 years • Your current RIs
- 5. RI Savings Vary 5 RI price points and discounts are different for every region, instance type on OS!!! No Upfront Partial Upfront All Upfront Terms Available 1 year 1 year or 3 year 1 year or 3 year Savings for 1-Year RIs (Linux) 20-50% 25-58% 27-58% Savings for 3-Year RIs (Linux) N/A 41-74% 45-75% Hours Billed 24 hrs a day 24 hrs a day 24 hrs a day
- 6. Effective Hourly Rate for RIs On! Demand! All! Upfront! $$$!$! Partial! Upfront! ! Medium! No! Upfront! Effective hourly rates of 1-year RIs Linux in US-East Assumes 100% utilization ________! Heavy! m3.medium! $.0700!$.0500! Light! $.0433!$.0425! $.0477! $.0766! 39% savings 38% savings 29% savings RI price points and discounts are different for every region, instance type on OS!!!
- 7. • You are now committing to the minimum number of instances used. • You are charged hourly rate 24x7 regardless if you are using it • The Effective Hourly Rate and the discounts published by AWS are based on 24x7 usage • If you scale up and down, or turn off instances during weekends and holidays, you need to look closely at breakeven points. • Example: There are 251 working days in 2014. If you turn off an instance on weekends or after hours, No Upfront is not worth it. • Combine historic analysis with your knowledge of the future • Can you commit to an instance type in a specific Availability Zone? • Is you application’s architecture changing? (Dev/Ops team can help here) • Instance type consolidation is more important • Have a planned approach across your company on instance types and sizes • Consolidation will make it easier to buy and use Ris to get highest discount and minimize waster • Analysis on underutilized RIs (waste) becomes much more important Purchasing New AWS RIs 7
- 8. • Analyze past usage trends with Cloud Analytics What and How Many to Buy 8
- 9. • Forecasts future usage with Cloud Analytics What-if Scenarios 9
- 10. • How they are applied can be different to how you show/charge back • Here is how they are applied: • In Consolidated Billing, the purchasing account gets priority • If you have bought the RI at the payer level, then: • The oldest instance gets the reservation till it stops using it, then it goes to the next oldest • The cheapest price is applied from all your reservations • Here is how you can show/charge back • Un-Blended rate: Show the costs as they are applied (instance 1 in account 1 used it for 3 hours, instance 1 in account 2 used it for 5 hours etc). Deal with the upfront cost too. • Blended rate: Regardless of who used RIs or On-Demand instances, split sum based on usage. How RIs are Applied by AWS 10
- 11. • Volume Discounts • $500K and above, you will get 5% discount • $4M and above, you will get 10% discount • These are within a region only (e.g. US-East). Discounts do not include Windows with SQL Server. • Spot • AWS selling their unused servers on an hourly bid price. • If your application can handle an instance suddenly disappearing with no warning, this is an option. • RI Marketplace • Sell your unwanted Reserved Instances (US only). • You set the upfront fee. This is what you will get if sold (minus 12% service charge). • Cannot sell RIs that you have got volume discounts on. • How long will it take to sell on the marketplace? • Median of 14-19 days according to Jan 2014 analysis by http://blog.supplyframe.com • RightScale customer – sold all RIs (primarily Heavy) within 2-4 weeks at residual value • Buy shorter-term RIs Other Ways to Save on AWS Pricing 11
- 12. AWS VS GOOGLE PRICING 12
- 13. About Google Sustained-Use Discounts • No commitment. The more you use an instance family during the month, the higher the discount. • Hourly rate tiers down as you hit 25%, 50% and 75% of the time in a month. Usage Level % of Billing Cycle Incremental Rate % of On-Demand Baseline Sample Rate n1-standard-1 Total Cost 0-25% 100% $0.07 $13.02 25-50% 80% $0.056 $10.42 50-75% 60% $0.042 $7.81 75-100% 40% $0.028 $5.21 Monthly Cost at 100% usage $36.46
- 14. Google SUD uses “Inferred Instances” 14 Source: Google!
- 15. • AWS No Upfront RIs vs. Google 100% SUD is closest to apples-to-apples • Comparisons based on: • US-East Region • Linux operating system • Assumes instances are running 24x7 • No volume discount tiers • Keep in mind that this is a price comparison only. The specific performance of each instance might vary. • AWS high-memory and high-CPU instances have more memory along with an SSD, that balances Google’s lower price. Depending on workload, the high-CPU c3 series from AWS could provide a better price/performance option. AWS vs Google 15
- 16. 16 Google Instance Type CPU Cores RAM AWS Instance Type CPU Cores RAM Google New On-Demand (per hour) AWS On-Demand (per hour) AWS Price vs. Google n1-standard-1 1 3.75 m3.medium 1 3.75 $ 0.063 $ 0.070 +11.11% n1-standard-2 2 7.5 m3.large 2 7.5 $ 0.126 $ 0.140 +11.11% n1-standard-4 4 15 m3.xlarge 4 15 $ 0.252 $ 0.280 +11.11% n1-standard-8 8 30 m3.2xlarge 8 30 $ 0.504 $ 0.560 +11.11% n1-highmem-2 2 13 r3.xlarge 2 15 $ 0.148 $ 0.175 +18.24% n1-highmem-4 4 26 r3.2xlarge 4 30.5 $ 0.296 $ 0.350 +18.24% n1-highmem-8 8 52 r3.4xlarge 8 61 $ 0.592 $ 0.700 +18.24% n1-highcpu-2 2 1.8 c3.large 2 3.75 $ 0.080 $ 0.105 +31.25% n1-highcpu-4 4 3.6 c3.xlarge 4 7.5 $ 0.160 $ 0.210 +31.25% n1-highcpu-8 8 7.2 c3.2xlarge 8 15 $ 0.320 $ 0.420 +31.25% n1-highcpu-16 16 14.4 c3.4xlarge 16 30 $ 0.640 $ 0.840 +31.25% Google vs. AWS On-Demand Pricing! Source: RightScale After GCE price cuts of October 1, 2014
- 17. 17 Google Instance Type CPU Cores RAM AWS Instance Type CPU Cores RAM Google New 100% Usage ( per year) AWS 1-year No Upfront RI (per year) New AWS Price vs. Google n1-standard-1 1 3.75 m3.medium 1 3.75 $394 $438 +11.11% n1-standard-2 2 7.5 m3.large 2 7.5 $780 $876 +12.36% n1-standard-4 4 15 m3.xlarge 4 15 $1,551 $1,752 +12.99% n1-standard-8 8 30 m3.2xlarge 8 30 $3,094 $3,504 +13.25% n1-highmem-2 2 13 r3.xlarge 2 15 $911 $964 +5.77% n1-highmem-4 4 26 r3.2xlarge 4 30.5 $1,822 $1,927 +5.77% n1-highmem-8 8 52 r3.4xlarge 8 61 $3,635 $3,854 +6.02% n1-highcpu-2 2 1.8 c3.large 2 3.75 $491 $639 +30.36% n1-highcpu-4 4 3.6 c3.xlarge 4 7.5 $981 $1,279 +30.36% n1-highcpu-8 8 7.2 c3.2xlarge 8 15 $1,962 $2,558 +30.36% n1-highcpu-16 16 14.4 c3.4xlarge 16 30 $3,924 $5,116 +30.36% Google Sustained-Use vs. AWS 1-year No Upfront Reserved Instance Pricing! Source: RightScale After AWS RI model change of December 2, 2014
- 18. 18 Google Instance Type CPU Cores RAM AWS Instance Type CPU Cores RAM Google New 100% Usage ( per year) AWS 1-year Partial Upfront RI (per year) New AWS Price vs. Google n1-standard-1 1 3.75 m3.medium 1 3.75 $394 $379 -3.78% n1-standard-2 2 7.5 m3.large 2 7.5 $780 $767 -1.57% n1-standard-4 4 15 m3.xlarge 4 15 $1,551 $1,534 -1.07% n1-standard-8 8 30 m3.2xlarge 8 30 $3,094 $3,051 -1.33% n1-highmem-2 2 13 r3.xlarge 2 15 $911 $830 -8.85% n1-highmem-4 4 26 r3.2xlarge 4 30.5 $1,822 $1,660 -8.89% n1-highmem-8 8 52 r3.4xlarge 8 61 $3,635 $3,320 -8.67% n1-highcpu-2 2 1.8 c3.large 2 3.75 $491 $554 +12.86% n1-highcpu-4 4 3.6 c3.xlarge 4 7.5 $981 $1,116 +13.75% n1-highcpu-8 8 7.2 c3.2xlarge 8 15 $1,962 $2,215 +12.90% n1-highcpu-16 16 14.4 c3.4xlarge 16 30 $3,924 $4,439 +13.10% Google Sustained-Use vs. AWS 1-year Partial Upfront Reserved Instance Pricing! Source: RightScale After AWS RI model change of December 2, 2014
- 19. 19 Google Instance Type CPU Cores RAM AWS Instance Type CPU Cores RAM Google New 100% Usage ( per year) AWS 1-year Partial Upfront RI (per year) New AWS Price vs. Google n1-standard-1 1 3.75 m3.medium 1 3.75 $394 $372 -5.56% n1-standard-2 2 7.5 m3.large 2 7.5 $780 $751 -3.71% n1-standard-4 4 15 m3.xlarge 4 15 $1,551 $1,503 -3.05% n1-standard-8 8 30 m3.2xlarge 8 30 $3,094 $2.989 -3.34% n1-highmem-2 2 13 r3.xlarge 2 15 $911 $813 -10.77% n1-highmem-4 4 26 r3.2xlarge 4 30.5 $1,822 $1,626 -10.77% n1-highmem-8 8 52 r3.4xlarge 8 61 $3,635 $3,253 -10.53% n1-highcpu-2 2 1.8 c3.large 2 3.75 $491 $542 +10.54% n1-highcpu-4 4 3.6 c3.xlarge 4 7.5 $981 $1,093 +11.43% n1-highcpu-8 8 7.2 c3.2xlarge 8 15 $1,962 $2,170 +10.58% n1-highcpu-16 16 14.4 c3.4xlarge 16 30 $3,924 $4,350 +10.85% Google Sustained-Use vs. AWS 1-year All Upfront Reserved Instance Pricing! Source: RightScale After AWS RI model change of December 2, 2014
- 20. 20 Google Instance Type CPU Cores RAM AWS Instance Type CPU Cores RAM Google New 100% Usage ( per year) AWS 3-year Partial Upfront RI (per year) New AWS Price vs. Google n1-standard-1 1 3.75 m3.medium 1 3.75 $394 $244 -38.22% n1-standard-2 2 7.5 m3.large 2 7.5 $780 $487 -37.52% n1-standard-4 4 15 m3.xlarge 4 15 $1,551 $974 -37.18% n1-standard-8 8 30 m3.2xlarge 8 30 $3,094 $1,948 -37.00% n1-highmem-2 2 13 r3.xlarge 2 15 $911 $572 -37.21% n1-highmem-4 4 26 r3.2xlarge 4 30.5 $1,822 $1,144 -37.21% n1-highmem-8 8 52 r3.4xlarge 8 61 $3,635 $2,288 -37.06% n1-highcpu-2 2 1.8 c3.large 2 3.75 $491 $362 -26.25% n1-highcpu-4 4 3.6 c3.xlarge 4 7.5 $981 $733 -25.27% n1-highcpu-8 8 7.2 c3.2xlarge 8 15 $1,962 $1,466 -25.31% n1-highcpu-16 16 14.4 c3.4xlarge 16 30 $3,924 $2,931 -25.31% Google Sustained-Use vs. AWS 3-year Partial Upfront Reserved Instance Pricing! Source: RightScale After AWS RI model change of December 2, 2014
- 21. Things to Remember • For AWS: • High-CPU and high-mem have more memory and SSD • You can get volume discounts (5% starting at $500K annual RI spend) • You can choose Spot Pricing to save more • You can use RI Marketplace to buy/sell RIs • For Google: • No commitment • No lock-in to instance types or regions • It’s automatic - no RI purchase decisions • Per-minute pricing (minimum of 10 minutes) • When on-demand price goes down, you get the benefit. • They’ve lowered On-Demand prices 38% so far in 2014
- 23. Calculating Breakeven for AWS RIs • Breakeven Defined • How long do I need to use an RI for it to be cheaper than On-demand? • This is not a cash-flow analysis, but a cost analysis • The Impact Upfront Commitment • For all the new-style AWS Ris, you are committing to the full price of the RI upfront – the only difference is when you actually pay • Unlike old Light and Medium RIs, with new AWS Ris you can’t stop paying the hourly fee even if you stop using the RI – no walkaway option
- 24. $- $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 $700.00 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 On-Demand 1yr No Upfront RI = 261 days to breakeven (72%) 1yr Partial Upfront RI = 226 days to breakeven (62%) 1yr All Upfront RI = 222 days to breakeven (61%) Breakeven Analysis for m3.medium (US-East, Linux) for NEW 1-year RIs ! Source: RightScale After AWS RI model change of December 2, 2014
- 25. $- $200.00 $400.00 $600.00 $800.00 $1,000.00 $1,200.00 $1,400.00 $1,600.00 $1,800.00 $2,000.00 Month1 Month2 Month3 Month4 Month5 Month6 Month7 Month8 Month9 Month10 Month11 Month12 Month13 Month14 Month15 Month16 Month17 Month18 Month19 Month20 Month21 Month22 Month23 Month24 Month25 Month26 Month27 Month28 Month29 Month30 Month31 Month32 Month33 Month34 Month35 Month36 On-Demand 3yr Partial Upfront RI = 435 days to break even (40%) 3yr All Upfront RI = 409 days to breakeven (37%) Breakeven Analysis for m3.medium (US-East, Linux) for NEW 3-year RIs ! Source: RightScale After AWS RI model change of December 2, 2014
- 26. $- $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 $700.00 $800.00 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 On-Demand 1yr Heavy RI = 226 days to breakeven (62%) 1yr Medium RI = 175 days to breakeven (48%) 1yr Light RI = Light COSTS MORE Breakeven Analysis for m3.medium for OLD 1-year RIs ! Source: RightScale After AWS RI model change of December 2, 2014
- 27. IMPACT OF PRICE DROPS 27
- 28. $0.58 $0.50 $0.45 $0.28 $0.28 Oct 2012 Feb 2013 Nov 2013 Mar 2014 Dec 2014 Cloud Price Drops 28 AWS On-Demand Price Drops m3.xlarge US-East Linux Drop of 51.7% in 26 months Averages out to 23.9% in a year -10%! -38%! -13.8%! No chg! Launch! Are we close to another price cut?
- 29. $- $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 $700.00 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 On-Demand- 261 days to breakeven OD 24% cut in M7 - 286 days to breakeven OD 24% cut in M1 - 346 days to breakeven 1yr No Upfront RI Impact of Price Drops on Breakeven Analysis for m3.medium for 1-year RIs ! Source: RightScale After AWS RI model change of December 2, 2014 29% savings 19% savings 6% savings
- 30. $- $200.00 $400.00 $600.00 $800.00 $1,000.00 $1,200.00 $1,400.00 $1,600.00 $1,800.00 $2,000.00 Month1 Month2 Month3 Month4 Month5 Month6 Month7 Month8 Month9 Month10 Month11 Month12 Month13 Month14 Month15 Month16 Month17 Month18 Month19 Month20 Month21 Month22 Month23 Month24 Month25 Month26 Month27 Month28 Month29 Month30 Month31 Month32 Month33 Month34 Month35 Month36 On-Demand OD -24% yearly M7 - 515 days to breakeven OD -24% yearly M1 - 638 days to breakeven 3yr Partial Upfront RI - 435 days to breakeven Impact of Price Drops on Breakeven Analysis for m3.medium for 3-year RIs ! Source: RightScale After AWS RI model change of December 2, 2014 60% savings 42% savings 33% savings
- 31. • New instance types are introduced ocassionally • List some • What happens to prices and price/performance • What it means for RIs What About New Instance Types? 31
- 32. • T2 launched Jul 2014 • R3 launched Apr 2014 • I2 launched Dec 2013 • C3 launched Nov 2013 • M3 launched Oct 2012 What about New Instance Types? 32
- 33. $0.58 $0.50 $0.45 $0.28 $0.28 0.68 0.64 0.52 0.48 0.35 Oct 2009 Sep 2012 Oct 2012 Feb 2013 Nov 2013 Mar 2014 Dec 2014 Pricing on Instance Family Changes 33 AWS On-Demand Price Drops m1.xlarge to m3.xlarge US-East Linux
- 34. Takeaways • New AWS RIs can save you money, but… • Future On-Demand price cuts can erode the differential • Do your breakeven analysis! • Try to consolidate instance families • Consider selling RIs you can’t use • Breakeven periods can be significant, so… • Work with your IT team to understand future usage • Think about upcoming instance type changes • In the Google vs AWS price wars… • Google is getting more aggressive in cuts, backed by deep pockets • It’s unclear if/how AWS will respond over time • Longer commitments to AWS (3 yr RIs) can save you more
- 35. Q&A Try Cloud Analytics 60-day Free Trial www.rightscale.com/analytics Read our blogs on AWS price changes and other cloud pricing topics www.rightscale.com/blog/cloud-cost-analysis