Amazon AWS – EC2 – Costing Explained

Out of the plethora of services that Amazon offers, the most popular services are Amazon Elastic Compute Cloud. These are also popularly known as Amazon EC2. Web-scale computing can be easily redesigned using this web service. The services offered by Amazon follow a simple policy according to which you will only have to pay for the services that you are using.

There is no concept of ‘minimum fee’ on Amazon. You can calculate your monthly expenditure using a tool called ‘AWS Simple Monthly Calculator’, which is available on the Amazon website. This blog explains the costing concepts for all the other services available with Amazon.

• On Demand Instances
  This billing format allows users to pay their hourly usage of compute capacity. Moreover, there are no long term commitments involved. As a result, the large fixed costs involved are broken down into small variable costs. Besides, you are not required to pay for plan, purchase and maintenance of hardware. The pricing done for a service is billed on a per hour basis for each of the instances used. The pricing is different for different operating systems though. The time is logged from the time the instance was initiated to the time that it was terminated. Besides, a partial hour is also taken as a full hour. But the best part is that there are no long-term commitments required with Amazon.

• Reserved Instances
  This payment format allows you to make a small one-time payment, which reserves an instance for your use in the future as well. Against this, you get a discount on the hourly charge for the service. According to Amazon’s own website, with this payment format you can save up to 65% over On Demand rates. Reserved instances are of three main types – Heavy, Medium and Light Utilization. These instances are available for SUSE Linux Enterprise, Red Hat Enterprise, Windows and Linux/Unix. Instances of Amazon VPC can also be reserved at a price. You can also expect to get good discounts if you buy bulk reserved instances. Discounts are directly applied on future purchases and upfront fees.

• Spot Instances
  This payment format follow the simple rules of demand and supply. The users can bid for unused capacity on the Amazon EC2 using Spot Instances. Instances bought under this payment format are charged on the spot price. This price is not set and fluctuates on the basis of the demand and supply parameters. The spot price is determined by the Amazon EC2. In order to bid for a spot instance, you need to send a request specifying the type of instance, the desired zone of availability, Spot Instances’ number and your hourly bid price. Spot Instances is most suitable for time-flexible and interruption-tolerant tasks.

• Data Transfer
  The billing done for data transfer is based on the amount of data that enter and exit the cloud. Different rate tiers are defined for different services. In this pricing format, provisioned IOPS (input/output operations per second) is charged by the you provision in IOPS. This amout is then multiplied by the percentage of days you provision for in a month.
• EBS – Optimized Instances
  Amazon EC2 instances can utilize the full capacity of the IOPS on EBS Volume if you complement them with EBS-Optimized instances. The pricing of these instances depends upon the movement of inputs and outputs between Amazon EC2 and Amazon EBS.

All said and done, it is important for you to know that prices are region dependent. Therefore, you must look at the Purchasing Options page on the Amazon website for actual costing. An important functionality worth mentioning here is that Amazon allows its new users to access few of its services for free during the initial sign-up period. The services that are offered free on a monthly basis during the first year of sign-up can be found at the Amazon page.