Hi there! 👋

I’m Dhyuthidhar, and if you’re new here, welcome! I love exploring computer science topics, especially machine learning, and breaking them down into easy-to-understand concepts. Today, let’s continue to talk about EC2.

Struggling to pick the right EC2 billing option for your project?

Don't worry—today, we’ll explore all the options to help you make an informed decision, saving both time and money!

If you're new to AWS or EC2, I highly recommend checking out my previous posts on AWS and EC2 basics. They’ll give you a solid foundation before you dive into billing specifics

EC2: https://sudheendra.hashnode.dev/aws-ec2-explained-a-beginners-guide-to-cloud-computing-and-instance-types

AWS: https://sudheendra.hashnode.dev/cloud-computing-a-game-changer-for-it-infrastructure

Buckle up and let’s learn together!

There are multiple billing options for EC2 instances. Let’s see those options:

Billing Options for EC2

1) On-Demand

• This will offer the EC2 compute service per hour or minute, depending on your instance type and OS.

• Based on the time you utilize, you need to pay the amount.

• With this option, you're not locked into long-term commitments (1 or 3 years).

• There is no upfront cost, so you pay as you go; investing in infrastructure is unnecessary.

• This option is great for beginners and those experimenting with AWS. There is no prior contract or communication with AWS to use this service.

• You can use this to get a baseline average for your usage and then upgrade to other billing options.

  

2) Savings Plan

• This is the plan users can use if they want an EC2 instance to work for one or three years.

• The cost for one or three years will be cheaper compared to paying for on-demand.

• Measured in dollars per hour for one or three years.

• This billing option offers a 72% discount on AWS compute usage compared to on-demand.

• You need to have a commitment for either 1 or 3 years.

• Whatever the configuration of EC2, the user gets lower prices compared to on-demand.

• Covers EC2, AWS Lambda, AWS Fargate, etc, allowing more freedom in how you use the services.

  

3) Reserved instances

• If the usage of the EC2 instance is predictable, then you can use this option.

• This one can give you a 75% discount versus on-demand pricing.

• It is limited to the configurations of the EC2 instance; you need to select the configurations, including type and OS, at the start.

• Here you have three payment options:

  • All Upfront: Pay the full amount upfront.

  • Partial Upfront: Pay part upfront, the rest monthly.

  • No Upfront: Pay monthly for the entire duration.

• Tied to the specific instance you choose (e.g., you cannot change the instance type after purchase).

  

4) Spot Instances

• Spot instances let you access unused Amazon EC2 computing capacity at a discount of up to 90% compared to the on-demand price.

• You can bid for these instances, and if your bid is higher than the current spot price (which fluctuates), you get the instance.

• If EC2 needs the capacity back or the price goes higher than your bid, your Spot Instance can be terminated, but you can still use it until that happens.

• Spot instances only run if there is available capacity, and they are terminated if AWS needs that physical capacity back.

• It's a cost-effective way to use EC2 capacity for flexible workloads that can tolerate interruptions (such as batch processing, data analysis, etc.).

  

5) Dedicated Hosts

• With Dedicated Hosts in AWS, you get a physical server for running your EC2 instances.

• Unlike shared EC2 instances, with dedicated hosts, you get the entire physical server to yourself.

• They ensure that specific licensing and data security rules are followed, especially for isolated workloads.

  You have full control over the physical server while using EC2 instances, but the billing is for the entire host, not each instance.

  

Conclusion:

In this blog, we've explored various EC2 billing options, from the flexible on-demand pricing to the cost-effective savings plans and spot instances. Each option is designed to fit different use cases and budgets, helping you optimize your cloud costs efficiently.

Next Up:

In the next blog, we’ll cover EC2 scaling—how to adjust your instances for growth and performance. Stay tuned!

Action Step:

Q) What billing option do I need to choose if I want a flexible configured EC2 instance for a 3-year commitment? Answer in the comments!

What’s your go-to EC2 billing option? Share your thoughts in the comments! Start exploring with the AWS Free Tier. See you in the next blog! 🚀

Why I Share This

Simon Squibb believes that the best way to share knowledge is to make it simple and accessible. And that’s exactly what I do—I break down complex tech into something easy and exciting.

Tech should inspire you, not intimidate you.

Imagine a world without the cloud—every startup would need huge investments just to get started. AWS changed that game. The cloud lets anyone with an idea build something incredible without worrying about infrastructure.

I share knowledge this way because I want you to feel that excitement too.

If this post made you think differently about tech, check out my other blogs. Let’s make tech easy and exciting—together! 🚀