Amazon Web Services Rolls Out New Pricing Model For EC2

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Amazon has changed the pricing model of its cloud computing platform, Amazon Web Services, creating what’s called “Reserved Instances” for its EC2 Product. Reserved instances basically lower the price of the service and guarantees storage capacity in exchange for a commitment to use EC2 for a year or more.

Amazon says that its new pricing model lowers cloud computing costs for businesses. Customers make a one-time payment for each instance they want to reserve and in turn receive a significant discount on the hourly usage charge for that instance. (An instance is Amazon’s unit of computational capacity). After the one-time payment, the instance is reserved and there is no further obligation; customers only pay for the compute capacity that they consume. For example, an on-demand EC2 Small instance costs $0.10 per hour. For a one year commitment for the EC2 reserved instance, the cost is $0.067 per hour, including a one-time reserved instances fee and usage cost. Amazon compares the one-time fee to “acquiring hardware,” and the hourly usage fee to “operating costs.”

Here’s the breakdown of the on-demand instances costs vs. the reserved instances costs:


Amazon has started to become a big player in the cloud computing space, adding a partnership with IBM recently. No doubt, Amazon is trying to get a long term commitment to its cloud computing platform from businesses. Microsoft’s cloud computing platform Azure is scheduled to launch sometime this year, so perhaps Amazon is trying to lock in customers before Azure’s debut.

  • Ryan Irvine

    This is actually going to be extremely worthwhile for people who are going to use EC2 for an entire year. Under the new pricing plan a small instance is 587.80 per year (base, not counting transfer) while the normal hourly rate would be 876 a year. And obviously usage over 3 years would become even cheaper.

  • james

    wow…very tempting! The 3 year deal is a no brainer almost, especially for the small instance. Amortized in 3 years it comes down to $30-$40/month.

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  • Markus

    In summary, Amazon now offers a 33% discount on 1 year (partially) pre-payed instances.

    Not bad at all.

  • Neno Brown

    All we need know is Solo card support and where ready to role.

  • pthomas

    Not bad!

  • pthomas

    I Just Saved A Bunch Of Money By Switching To EC2 Reserved Instances! In our case, we’re running on 2 small instances full time, by switching to the new reserved model, we have an extra 572/year in our pockets. Not bad. I bet lots of small startups are in the same situation.

  • Dror

    This is all very nice, but s3 and EC2 have had the same price for the last 2-3 years. Prices of CPUs and disks have been coming down since then. Amazon’s pricing needs to reflect that or people will start moving to more competitive solutions.

  • John Treadway

    @Dror – such as?

    • laughing

      @John – You beat me to it! :)

  • Chris is opening in 2 weeks.

    cloud computing services will be offered as well as CDN.

    Prices will be half that of it’s competitors, and bandwidth and storage will be extreme. If you are interested check that url in 2 weeks. It will be worth your wait.

    • ChrisATSo33t

      coupon code: UNMETERED-FREEDOM

      – 10% at Soeet CDN, and cloud computing store.

      Your prepaid use will be unmetered at

      We have a large cluster of dual Xeon servers loaded with massive HDDs and RAM for your enjoyment.

      CDN customers will just have to add a DNS A record for to point to our CDN server, and pay a small fee to start using it.

      We’re also including a free easy to use control panel and are working on an API for web storage.

      ETA 2 weeks until you can immediately use the services at minimal cost.

    • ChrisATSo33t

      We’ll also be offering video, and messaging CDN solutions as well as advanced telephony systems based on GPS, enterprise LDAP and easy software deployment and enterprise resource management, via mobile.

    • ChrisATSo33t

      I didn’t specify the cloud services.

      specifically, you will be able to prepay monthly for virtual server images of your choice to be spawned on

      up to:
      20 2.6Ghz Xeons
      120GB RAM
      115MBPS – no metering, burstable*

      No region to region data transfer fees(we have 1 region right now). No on LAN data transfer fees on the switch.

      Since we do not have a good Windows hypervisor, nor care to support it, this will be limited to Solaris and Linux.

      * extra cost

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  • Bret
  • Hareem Haque


    Really…. last time i checked.. only gogrid was there to cause them trouble. They are good but for instant scalability they are not the best.

    The only other vendor that beats out EC2 is 3tera with their applogic product. However, its designed for really high end enterprise usage. So prices are not from this world.

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  • MicroCopyMachine

    Based on recent Microsoft copying, I’d say Amazon is in the safe zone. When Microsoft takes the iPod and spits out a Zune, well, do you own one?

  • ChrisATSo33t

    For example 1 small server virtual image on Amazon is .10 an hour, so 2.40 a day or $72 per month.

    Our service will be ~$40 per month for a small virtual image that can be hypervised with several others.

    So once that one time fee is paid, all metering is turned off for the entire month. You can reserve and prepay as many months as you’d like. And you will be able to shut down your images and reboot them from the web. Unmetered.

    Please give us a shot when we’re up and running.

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  • conversion

    Prices keep going down, down, down, thanks in part to the competition. Lots of opportunity in this exciting space.

  • Nuno

    As usual, prices go down for consumer’s sake.

    This is really great!

  • Steve

    Competition and innovation form the magic that is capitalism, the consumer automatically wins due to the profit motive of businesses. This is one of the fist larger scale applications of cloud computing open to the “general public” that I’ve seen. Cloud computing does come with its own security risks though, many of which have been discussed here at tech crunch. That’s why I frequent this* security site.

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