AWS Reserved vs. On-demand vs. Spot Instances: When To Use Which
Tags: aws, cloud, cloudcomputing, amazon
Published: 2023-08-31 12:59:56

Figuring out when to use **AWS Reserved vs. On-demand vs. Spot Instances** might feel like a puzzle. But it is like solving a problem with different tools. Each of these three options has its role, benefits, and drawbacks. Choosing between them becomes easier as you learn more. It is all about finding the right mix of saving money, having flexibility, and ensuring things work well. So, let's explore when each of these options works best for your needs.

## Reserved Instances

In this model, you are paying for instances you "reserve" for one year or three years. Also, this instance is comparatively considered cost-efficient compared to others in AWS Reserved vs. On-demand vs. Spot Instances. In addition, Reserved Instances come in two different kinds. First is Standard Reserved Instances, and second is Convertible Reserved Instances.

### Best Conditions to Utilize Reserved Instances

These work well for projects that have anticipated computing needs. You should be confident that you will use most of the available capacity for your reservation period, which could be 1 to 3 years. This way, you avoid spending funds on instances you use occasionally. Moreover, having the required capacity brings peace of mind, eliminating worries.

## On-demand Instances

In this model, you buy them only when necessary. You buy enough cloud computing power whenever required without committing overtime. If you no longer require it, you will remove the workload and discontinue the instances, adjusting the cloud capacity as your computing requirements shift.

### Best Conditions to Utilize On-Demand Instances

You should use On-Demand Instances when you want accuracy and adaptability. This scenario commonly arises when you need to run tasks with varying workloads without impacting your applications.
Use On-Demand Instances only for projects with a short duration when you can't foresee how much capacity will be required at any moment. Reserved Instances are far more cost-effective if your project is ongoing for extended periods or you can forecast your computing demands accurately. In this situation, estimating your project needs and cost for your AWS instances can be challenging, but you can use [AWS Consulting Services](https://www.bacancytechnology.com/aws-consulting-services) to overcome this difficulty. 

## Spot Instances

Cloud providers must keep some capacity on their site available in the event of enormous customer demand. When you purchase a Spot Instance, you effectively rent surplus space from your cloud provider for a limited period. If demand increases and your cloud provider requires additional capacity, they will typically take it back with fewer than a minute's warning before your space vanishes. However, this does not imply you should prevent Spot Instances entirely; instead, you should utilize them intelligently.

### Best Conditions to Utilize Spot Instances

Spot Instances are typically recommended for without a state and containerized apps that perform short-term activities. Spot Instances are expected to see rising adoption as cloud utilization improves and teams seek more flexibility. They are perfect for initiatives requiring a high level of flexibility at a reasonable cost. Overall, you must refrain from running vital to business apps on Spot Instances because they will cause client inconvenience if the application fails.  

## Which Instance Type is Best for You?

Choosing a specific type of instance is not just about picking one and sticking with it; many groups use a blend of each of the three types according to their circumstances. Comparing _AWS Reserved vs. On-demand vs. Spot Instances_ may appear complicated initially, but they are pretty easy once you go further. You should find the ideal balance of price, flexibility, and dependability for [AWS Cost Optimization](https://www.bacancytechnology.com/blog/aws-cost-optimization).