Introduction: Why This Comparison Still Matters
If you’re trying to reduce your AWS bill, chances are you’ve run into the same confusing question:
Should I use AWS Savings Plans or Reserved Instances?
AWS markets both as “up to 72% savings,” but the reality is more nuanced. The wrong choice can lock you into unnecessary spend, while the right one can save tens or hundreds of thousands of dollars annually.
In this deep dive, we’ll break down AWS Savings Plans vs Reserved Instances, compare real-world scenarios, and answer the big question:
What actually saves more?
Understanding the AWS Pricing Model (Quick Refresher)
Before comparing discounts, it’s important to understand how AWS pricing works:
- On-Demand – Pay per second/hour, no commitment, highest cost
- Reserved pricing models – Commit to usage for lower rates
- Spot Instances – Cheapest, but interruptible (not covered here)
Both Savings Plans and Reserved Instances (RIs) are AWS’s primary long-term cost optimization tools.
What Are AWS Reserved Instances?
Reserved Instances are a commitment to a specific instance configuration for a 1-year or 3-year term.
Key Characteristics
- Applies to EC2, RDS, ElastiCache, and more
- Discounts up to 72% vs On-Demand
- Requires choosing:
- Instance family (e.g., m5)
- Instance size (e.g., m5.large)
- Region
- OS
- Tenancy
Types of Reserved Instances
- Standard RIs – Highest discount, lowest flexibility
- Convertible RIs – Lower discount, can change instance family
- Scheduled RIs – Rarely used, niche workloads
Pros
✅ Predictable cost
✅ High discounts for steady workloads
✅ Ideal for stable production systems
Cons
❌ Rigid configuration
❌ Risk of underutilization
❌ Poor fit for dynamic or evolving workloads
What Are AWS Savings Plans?
AWS Savings Plans are a commitment to spend a fixed amount per hour (e.g., $10/hr) rather than committing to specific resources.
Types of Savings Plans
1. Compute Savings Plans
- Applies to:
- EC2 (any instance family)
- AWS Lambda
- AWS Fargate
- Maximum flexibility
2. EC2 Instance Savings Plans
- Restricted to a single instance family in a region
- Slightly higher discount than Compute Savings Plans
Pros
✅ Extremely flexible
✅ Automatically applies to eligible usage
✅ Covers serverless & containers
✅ Less risk of wasted spend
Cons
❌ Slightly lower max discount than Standard RIs
❌ Requires good spend forecasting
AWS Savings Plans vs Reserved Instances: Side-by-Side Comparison
| Feature | Savings Plans | Reserved Instances |
|---|---|---|
| Commitment | $/hour spend | Specific instance |
| Flexibility | High | Low–Medium |
| Max Discount | ~66% | ~72% |
| Covers Lambda/Fargate | Yes | No |
| Risk of Waste | Low | Medium–High |
| Best For | Dynamic workloads | Stable workloads |
Cost Comparison: What Actually Saves More?
Scenario 1: Stable EC2 Production Workload
- Same instance type
- Same region
- Runs 24/7
Winner: Standard Reserved Instances
You’ll get the highest possible discount if nothing changes.
Scenario 2: Growing Startup or SaaS Platform
- Frequent scaling
- Instance family changes
- Mix of EC2 + Lambda
Winner: Compute Savings Plans
Flexibility beats marginal extra discount.
Scenario 3: Kubernetes / Containers (EKS + Fargate)
Winner: Savings Plans (no contest)
Reserved Instances don’t apply to Fargate.
Scenario 4: Poor Forecasting or Uncertain Roadmap
Winner: Savings Plans
Less chance of paying for unused capacity.
The Hidden Cost: Underutilization
Here’s the uncomfortable truth:
A 72% discount on something you don’t use is still 100% waste.
Reserved Instances frequently suffer from:
- Instance size mismatches
- Architecture changes
- Region migrations
- Overcommitment
Savings Plans automatically adapt, applying discounts wherever eligible usage exists.
AWS’s Quiet Shift Toward Savings Plans
AWS hasn’t officially deprecated Reserved Instances but the signs are clear:
- Savings Plans support more services
- AWS cost tools prioritize Savings Plans recommendations
- New features arrive faster for Savings Plans
Translation: Savings Plans are the future default.
Best Practice: Use Both (Strategically)
The smartest AWS cost optimization strategy isn’t either/or.
Recommended Mix
- Baseline stable workloads → Reserved Instances
- Everything else → Savings Plans
This hybrid approach:
- Maximizes discounts
- Minimizes risk
- Keeps your AWS bill predictable
How to Decide (Simple Checklist)
Choose Reserved Instances if:
- Workload is unchanged for 1–3 years
- EC2 only
- Same instance type & region
Choose Savings Plans if:
- You want flexibility
- You use Lambda or Fargate
- You expect growth or change
- You don’t want to babysit reservations
Final Verdict: What Actually Saves More?
On paper: Reserved Instances
In real life: Savings Plans
For most teams in 2026, AWS Savings Plans save more money overall because they prevent waste even if the headline discount is slightly lower.
- For more information about AWS you can refer to Jeevi’s Page.
- This tutorial is just the beginning learn Cloud Computing hands-on in our complete course. Upgrade your skills.
