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March 29, 2023

Savings Plans vs Reserved Instances

The blog lets you explore the differences between Savings Plans and Reserved Instances eventually helping you determine which option is right for your business.

As cloud computing becomes increasingly popular, businesses are faced with a variety of options for managing their cloud resources. Two popular options for cost optimization are Savings Plans and Reserved Instances. Both of these options offer ways to save money on cloud usage, but they have some key differences that can make one option better suited to your business than the other. In this blog post, we will explore the differences between Savings Plans and Reserved Instances and help you determine which option is right for you.

What are Savings Plans?

Savings Plans are a flexible pricing model offered by cloud providers like Amazon Web Services (AWS) and Google Cloud Platform (GCP) (where the equivalent is called a committed use discount). With a Savings Plan, you commit to a certain amount of usage in advance and receive a discount on your cloud usage based on that commitment. Savings Plans offer significant discounts, up to 72%, compared to on-demand pricing.

One of the key benefits of Savings Plans is their flexibility. You can apply Savings Plans to any instance family, size, or region within your cloud provider's offerings. You can also change the scope of your Savings Plan at any time. This means you can adjust your commitment based on your business needs, and you can easily adapt to changes in your cloud usage.

What are Reserved Instances?

Reserved Instances are another cost optimization option offered by cloud providers. With a Reserved Instance, you commit to using a specific instance type for a certain period of time and receive a discount on your usage of that instance. Reserved Instances offer discounts of up to 75% compared to on-demand pricing.

Reserved Instances are less flexible than Savings Plans. You must choose the instance type, size, and region when you purchase the Reserved Instance, and you cannot change these parameters later. You also commit to using the Reserved Instance for a specific period of time, typically one or three years.

Savings Plans vs. Reserved Instances: Which is Right for You?

The decision to use Savings Plans or Reserved Instances depends on your business needs and usage patterns. Here are some key factors to consider when making your decision:

Flexibility: If you need flexibility in your cloud usage, Savings Plans are the better option. With Savings Plans, you can adjust your commitment to meet your changing needs. Reserved Instances are less flexible, and you cannot change the instance type, size, or region after purchase.

Upfront Commitment: If you are willing to make an upfront commitment to cloud usage, Reserved Instances offer greater discounts than Savings Plans. Reserved Instances also provide more predictable costs over time, as you lock in a fixed rate for the duration of the commitment.

Usage Patterns: If your cloud usage is steady and predictable, Reserved Instances may be a better option. Savings Plans can offer greater cost savings if your usage is more variable or unpredictable.

Every business has unique needs and usage patterns regarding cloud resources. At Cloudthread, we carefully evaluate their business requirements and recommend the best cost-optimization strategies for their specific situations. If you're a business looking for cost optimization needs, contact us here.


Savings Plans and Reserved Instances offer different benefits and drawbacks, so it's important to carefully consider your business needs and usage patterns when choosing between them. If you need flexibility and adaptability, Savings Plans may be the better option. If you are willing to make an upfront commitment and have steady usage patterns, Reserved Instances can provide greater cost savings. In either case, cost optimization strategies like these can help you get the most out of your cloud resources and keep your cloud spending under control.

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Copyright © 2024 CloudThread Inc. All rights reserved