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When AWS documentation and pricing refer to "usage" does this simply mean "if the instance is on" instead of "if the instance is on and doing work".

E.g., if I had an EC2 instance running but it was idle (CPU=0%), I assume I still get charged for that hour's usage.

In this case, if I had an EC2 instance which hosted a website (which should be accessible 24/7), it would make sense to purchase a Reserved Instance. Then, if I had to bring other instance online to share the load, those would (likely) best be served as On-Demand Instances.

Is my understanding correct?

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Note also that with a "heavy" reserved instance, as you mentioned below, you are charged even if the instance is NOT running. The Heavy utilization class, unlike Light and Medium, gives steeper discounts because you are also committing to pay for 100% of the hours each month. –  Michael - sqlbot Jan 14 at 12:47
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@Michael-sqlbot - so the only reason to not choose the "heavy" option for a server which will be running 100% of the time is to save the upfront cost. If you have the cash, it's best to go heavy for a 100% "on" instance. (Right?) –  Josh M. Jan 14 at 17:25
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up vote 22 down vote accepted

Yes, your understanding is correct. There's no AWS charging based on CPU usage -- you pay the same for an instance whether its CPU usage is 0% or 100%.

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Thanks. I'll accept this one since it was first. :) –  Josh M. Jan 14 at 7:29
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Yes, that's correct.

You might also look at spot instances for load sharing as they're much cheaper than on-demand instances with the drawback that they can disappear at any time. As long as you can manage that, they're a good option.

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Great, thanks. I just bought some 3yr heavy reserved instances and wanted to do a sanity check. :) Spot Instances sound good for background work that can be done at any point in time. –  Josh M. Jan 14 at 7:29
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