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I'm playing with the pricing page on AWS for EC2 instances. My understanding is you have "on-demand" which is pay as you go and then you have reserved instances where you pre pay. So coming from a VPS setup, am i correct in assuming that a reserved instances in AWS terminology is equivalent to a VPS plan? Granted I have to pay a year ahead but I wasn't sure if I'm missing anything else?

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closed as not a real question by Michael Hampton, EEAA, Ward, Brent Pabst, dunxd Dec 12 '12 at 15:35

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possible duplicate of Can you help me with my software licensing issue? –  Brent Pabst Dec 12 '12 at 13:46

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up vote 3 down vote accepted

First, let's clarify some terminology. VPS is an acronym for "Virtual Private Server". "VPS Plan" is meaningless. EC2 instances are VPSes. So not only are you "coming from" a VPS setup, but you're "going to" a VPS setup as well.

So to get to your question: the only difference between on-demand and reserved is how they are billed. On-demand pricing is higher due to the fact that Amazon needs to keep a certain amount of free capacity around to fulfill requests for on-demand instances. Idle capacity is (quite obviously) not making Amazon any money when it's not being used, so they assign a higher cost to on-demand instances to subsidize this idle capacity.

Reserved instances are cheaper due to the fact that you're reserving capacity and in doing so, are giving Amazon some forewarning that you are going to use this capacity for the term of the reservation.

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Think I figured it out. So i'm giving amazon an upfront fee AND I'm paying a monthly fee as well on the reserved instances. –  luckytaxi Dec 12 '12 at 2:45
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@luckytaxi Well, not exactly. You're paying some up front, and then an additional per-hour fee, not monthly. You'll be billed monthly, though, for the per-hour charges. At the end of the year if you add up your up-front reservation cost along with the hourly charges, your total bill will be significantly less than if you just used on-demand instances. –  EEAA Dec 12 '12 at 2:48
    
Understood so let's take what i saw on aws' page. I picked TWO small instances that will run 24x7 all year round. Monthly fee shows $23.42. Then there's a fee pre-paid fee of $390. –  luckytaxi Dec 12 '12 at 2:53
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@luckytaxi Yes, that's correct. Note that it's just a billing thing - Amazon will apply the reservation to any small instance in the right availability zone. So, you can terminate both instances, fire up two new ones, and they'll be your reserved instances now –  ceejayoz Dec 12 '12 at 3:10
    
Ok, here I thought the $390 covered my usage for the entire year. :-) I didn't realize I'm giving Amazon $390 AND paying ~$23/month as well. –  luckytaxi Dec 12 '12 at 3:11

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