AWS Savings Plans let you commit to a consistent hourly spend over 1 or 3 years in exchange for discounted rates. The discount applies automatically across services like EC2, Fargate, and Lambda, helping reduce compute costs while offering more flexibility than Reserved Instances. However, the challenge is often figuring out how much Savings Plans for compute usage to commit to – if you don’t buy enough you’ll be stuck paying costly On Demand rates, but if you buy too much, you’ll unnecessarily spend on unused SP.

The two types of Savings Plans offered by AWS are Compute and EC2 Savings Plans. Compute Savings Plans apply to any EC2 instance, Fargate, or Lambda usage across all regions and instance types. EC2 Instance Savings Plans offer higher discounts but are limited to a specific EC2 instance family and region, making them better suited for predictable, stable workloads.

Savings Plans apply to a broader set of compute options and adjust automatically across instance types, sizes, and regions. Reserved Instances are more rigid, requiring upfront decisions about instance type and region. However, Convertible Reserved Instances can be exchanged for other RIs with different attributes. Both offer discounts, but the type of flexibility they offer is different.