So if you spin up an EC2 instance just for when you need it and then bring it down when you’re done and stop paying for that is what’s called an on demand instance. Well what if you want to save a little bit when making your purchases? Well you have options. First off is reserved instances, you reserve these for 1 or 3 years and you pay a very large discount relative to on demand. The only catch is you are reserving a specific instance type, family, OS, etc, so once you have your instances you won’t be able to change them. A variation of this is a convertible reserved instance which allows you to change the OS, instance type, etc, but at the cost of a lower discount. If you want to spend a certain amount on your instances let’s say you want to spend $10 an hour for 3 years. You can go for a savings plan, this will introduce a significant discount, the catch is you must remain within your resource usage and if you move past that then it becomes on-demand. You are locked to a region with a savings plan as well as instance family let’s say for example M5 for memory, but you can increase the size and change the OS of the instance if you wish as well as whether it’s on a dedicated host or not. With dedicated hosts you reserve an entire host and the ability to create instances on it, this is likely the most expensive option but it is useful if you have licensing that restricts the ability to move applications across hosts such as per-cpu. If you choose to use dedicated instances you are reserving your instances on specific hardware and those instances will always be available to you however other instances owned by you will also be placed on that host. If you wish to have the largest discount possible then you may go for spot instances. Spot instances are extremely cheap however the catch is if your max price drops below the current spot price you lose the instance, you are essentially bidding. Then finally there’s capacity reservation, this option is ideal if you wish to have a large amount of capacity for your instances reserved in a specific AZ, this is useful if you absolutely need these instances to have the capacity to run and need the resources for them. You can cancel capacity reservation at any time. It’s best to try and combine capacity reservation with other savings plans if possible, it is important to note that you pay the on-demand price by default on capacity reservation even if those resources are not in use. As you can see you have lots of options and it’s important to choose the right plan based on the time you wish to use your application, how critical they are, how much you can afford to spend, and if your workload may need to change through the course of your payment plan.