4 ms·

I disagree. A 1-year heavy reservation for a Medium High-CPU instance is $765.36. A 3-year for the same is $1515.68, with a per-year amortized cost of $505.22 (

by tyw 14y ago

I disagree. A 1-year heavy reservation for a Medium High-CPU instance is $765.36. A 3-year for the same is $1515.68, with a per-year amortized cost of $505.22 (the first year will be more expensive than the 2nd and 3rd due to the up-front cost, but we're attempting to minimize the total cost, so I think averaging is fine here). If you got three 1-year reservations, the price reductions required to get the same average cost would have to be in excess of 33%/year. I don't know what the actual price drops have been, but I'd hazard a guess that they haven't been that significant. Is this math off in some way?

nilsbunger 14y ago
I think you're generally right. But there are at least three more factors to consider: 1) the 3-year reservations have a lower per-hour pricing than 1-year 2) the 1-year instance you would purchase a year later will have a lower per-hour price than the 1-year today. 3) you can resell the 3-year instance on amazon's marketplace after you're done with it, so it has residual value. So it all depends on how much prices drop, what resale values on the "old instances" are, etc. All in all, the differences probably aren't huge unless you're at massive scale (eg Netflix, Heroku, etc). But at that point you probably negotiate with Amazon directly anyway instead of working off a pricing table.
- tyw 14y ago
  #1 is the reason why the math works out in favor of 3 year reservations. I took this into account already: $price = $reservationCost+$hourlyRate*24*365*$numberOfYears Where reservation cost, hourly rate, and number of years are pulled off the chart for 1 or 3 year reservations for whatever instance size you're interested in. #2 is sort of what we're solving for... how much of a yearly price reduction would be necessary to make 3 consecutive 1-year reservations cheaper than a single 3-year reservation (or how much of a 3-year reservation you could effectively abandon and still come out ahead). By my math above, I came up with the magic number being about 40% discount per year making 3x 1-year reservations cheaper than a single 3-year reservation. $765 + $765*x + $765*x^2 = $1515 x = 0.60923 #3 I've yet to use the marketplace, but yes even after discounts happen down the road, your leftover reservation time is certainly worth something, pushing the balance even further in support of 3 year reservations.
  - finnh 14y ago
    The main driver of my comment is that I purchased 3-year terms before Amazon introduced the various categories of utilization. My instances have to run 24/7, so I need "heavy" utilization instances with concommitant higher hourly savings. By purchasing 3-year RI's prior to the utilization categories, I paid more (350 vs 300) for the reservation than even the costliest new reservation type (heavy) but my hourly rate is higher ($.06 vs $.059) than even the costliest new hourly type (light). At this point I can't run the numbers, though, b/c I'm not sure how much a 1-year term would have cost me back then. I only know how much I did pay for my 3 year terms. Maybe my gripe is simply that I feel my pre-category RIs should have been converted to "high" RIs with better hourly rates =)

by tyw 14y ago

nilsbunger 14y ago

I think you're generally right. But there are at least three more factors to consider: 1) the 3-year reservations have a lower per-hour pricing than 1-year 2) the 1-year instance you would purchase a year later will have a lower per-hour price than the 1-year today. 3) you can resell the 3-year instance on amazon's marketplace after you're done with it, so it has residual value. So it all depends on how much prices drop, what resale values on the "old instances" are, etc. All in all, the differences probably aren't huge unless you're at massive scale (eg Netflix, Heroku, etc). But at that point you probably negotiate with Amazon directly anyway instead of working off a pricing table.

tyw 14y ago
#1 is the reason why the math works out in favor of 3 year reservations. I took this into account already: $price = $reservationCost+$hourlyRate*24*365*$numberOfYears Where reservation cost, hourly rate, and number of years are pulled off the chart for 1 or 3 year reservations for whatever instance size you're interested in. #2 is sort of what we're solving for... how much of a yearly price reduction would be necessary to make 3 consecutive 1-year reservations cheaper than a single 3-year reservation (or how much of a 3-year reservation you could effectively abandon and still come out ahead). By my math above, I came up with the magic number being about 40% discount per year making 3x 1-year reservations cheaper than a single 3-year reservation. $765 + $765*x + $765*x^2 = $1515 x = 0.60923 #3 I've yet to use the marketplace, but yes even after discounts happen down the road, your leftover reservation time is certainly worth something, pushing the balance even further in support of 3 year reservations.
- finnh 14y ago
  The main driver of my comment is that I purchased 3-year terms before Amazon introduced the various categories of utilization. My instances have to run 24/7, so I need "heavy" utilization instances with concommitant higher hourly savings. By purchasing 3-year RI's prior to the utilization categories, I paid more (350 vs 300) for the reservation than even the costliest new reservation type (heavy) but my hourly rate is higher ($.06 vs $.059) than even the costliest new hourly type (light). At this point I can't run the numbers, though, b/c I'm not sure how much a 1-year term would have cost me back then. I only know how much I did pay for my 3 year terms. Maybe my gripe is simply that I feel my pre-category RIs should have been converted to "high" RIs with better hourly rates =)