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Amazon RDS Reserved Instances: Everything You Need to Know!

Originally Published July, 2024

By:

Jordan Chavis

Marketing

AWS RDS Reserved Instances

When managing resources in the cloud — be it Amazon Web Services (AWS), Google Cloud Platform, or Microsoft Azure — getting the most value for your money is key to driving business value from the cloud. 

AWS RDS Reserved Instances (RIs) help you minimize costs compared to On-Demand pricing while delivering equivalent performance levels. However, you need to understand the nuances of RDS RIs, such as payment options and flexibility within database engine families, in order to optimize your AWS spend. 

This article details the benefits and important considerations of AWS cost optimization with RDS Reserved Instances. You’ll discover how to secure savings while ensuring efficient database operations on Amazon’s cloud platform.

What are RDS Reserved Instances (RIs)?

Amazon Relational Database Service (RDS) Reserved Instances (RIs) are long-term reservations that offer significant cost savings over On-Demand pricing in exchange for a commitment to specific database instances for a one- or three-year term.

This model provides a predictable cost structure, which can lead to greater savings as you scale your operations within AWS.

However, remember that RDS is available in various instance types, each tailored to different workloads and performance requirements. Therefore, when choosing RDS Reserved Instances, it’s crucial to select instance types that align with your use cases to ensure maximum efficiency and cost-effectiveness.

But Reserved Instances aren’t just about lowering costs. They also support capacity reservation in defined Availability Zones. Capacity reservation guarantees system scalability and performance stability — critical for applications that need consistent database access and uptime. 

By leveraging RDS RIs, you can manage your budget more effectively while still benefiting from the scalability and performance of AWS database services. This is a solid approach for cost control and operational stability. 

How do RDS Reserved Instances work?

By opting for a Reserved Instance, you commit to a specific type of instance and benefit from a lower price than On-Demand pricing. This can be especially cost-effective for databases that run continuously. 

For AWS billing, Amazon automatically applies the reserved rate to eligible DB instance classes.

The instance pricing discount depends on several factors:

  • The DB instance type you commit to 
  • The specific DB engine you’re using 
  • The commitment term (one or three years)

This pricing model optimizes costs while effectively meeting your database needs.

How are AWS RDS Instances priced?

The pricing model for Amazon RDS Reserved Instances centers around the idea of commitment and upfront payment. 

Similar to EC2 Reserved Instances, you get three payment options:

  • No upfront payment: You pay nothing upfront but commit to paying for the instance over the term.
  • Partial upfront payment: You pay a part of the cost upfront, and the rest is spread out over the period.
  • All upfront payment: You pay the entire cost upfront in one lump sum, receiving the largest discount.

Going with all upfront can yield the most cost savings, as it typically offers the highest discount. 

What are the use cases of RDS Reserved Instances?

Leveraging RDS Reserved Instances can be a smart financial move in scenarios where consistency and long-term planning intersect with a desire for cost-effectiveness. RDS RIs are especially useful for:

Stable and predictable workloads

Reserved Instances should be your go-to choice when you have workloads that don’t fluctuate much. If your database needs are stable and predictable, RIs provide guaranteed cost savings and help you maintain performance levels without hiccups. 

Long-term commitment

When you can predict long-term usage of Amazon RDS, Reserved Instances can be a worthwhile investment. By committing to either a one-year or three-year term, you can secure a lower price than On-Demand and leverage the discount for long-term resource management.

Your commitment to a Reserved Instance means both savings and the peace of mind that comes from knowing your database has its place secured on the cloud.

Cost-optimization focus

Reserved Instances are also ideal if you’re implementing FinOps and taking steps to optimize your cloud spend. You can leverage significant savings if you’re good with RI usage tracking, forecasting, and overall RI management. 

However, managing AWS RDS Reserved Instances comes with its own unique set of challenges. If your usage predictions are off or your needs unexpectedly change, you may end up paying for RIs you don’t need anymore. Thus, a cautious approach is highly recommended. 

On-Demand Instances vs. Reserved Instances

When you’re using AWS RDS services, you’ll encounter two primary pricing models: On-Demand Instances and Reserved Instances. Understanding the differences between them is crucial to optimizing your costs.

On-Demand Instances are the go-to for flexibility. You pay hourly rates for compute and database capacity as and when needed, with no long-term commitments. This flexibility is ideal for managing unpredictable workloads or sudden spikes in demand, as it allows you to avoid long-term contracts. However, this convenience comes with a higher cost.

Reserved Instances, on the other hand, focus on savings and predictability. By committing to a one- or three-year term, you can save significantly over On-Demand pricing.

Here’s a quick comparison:

FeatureOn-Demand InstancesReserved Instances
PricingHigher hourly ratesLower hourly rates with upfront payment
CommitmentNo long-term commitments1- or 3-year term
FlexibilityHighLower due to the commitment
Ideal forUnpredictable workloadsSteady or predictable workloads
Potential cost savingsNoneUp to 69% compared to On-Demand pricing

If you’re considering Reserved Instances, make sure you have a thorough understanding of your usage patterns; otherwise, you could be trapped in negative savings over the long run instead. 

Why RI commitment management can be challenging

Managing your RI commitments can be challenging. To start, the diversity and volume of Reserved Instances — each with different tenures, expiration dates, and specifications — make monitoring and management extremely complex. 

Consistently monitoring your RI usage is also crucial. You have to keep a close eye on your usage patterns, making sure you’re not over or underutilizing your RIs. It’s a bit like walking a tightrope — lean too much on either side, and you could face spend inefficiencies.

Secondly, forecasting usage is challenging because of the uncertainties involved. Factors such as fluctuations in product demand or shifts in organizational policies can dramatically alter resource requirements, potentially leading to unused commitments. This unpredictability makes it difficult to forecast future needs accurately.

Lastly, there’s the fear of overprovisioning, which can lead users to under-commit, forgoing potential savings in the long run. One needs to understand cyclical workloads to effectively leverage commitment plans. Ultimately, effectively managing RIs requires a balanced approach that accommodates both current and future business needs.

Benefits of RDS Reserved Instances

AWS RDS Reserved Instances offer several benefits that can impact your AWS cost structure and operational planning. Here are a few:

Cost savings

With RDS Reserved Instances, you receive a substantial discount off the On-Demand price in exchange for committing to a one- or three-year term. These savings can be as high as 69%. The longer the term and the more you pay upfront, the greater the savings you’ll realize.

Budgeting and planning

RDS Reserved Instances offer predictability. Knowing your costs upfront helps you plan your budget more effectively. This allows for a more strategic approach to managing your AWS spending, transforming variable costs into fixed ones. This predictability also helps you achieve cost efficiency. In turn, your business can allocate future resources more effectively.

Capacity reservation

RDS RIs also support capacity reservation in defined Availability Zones. Capacity reservation guarantees system scalability and performance stability — critical for applications that need consistent database access and uptime. Securing capacity ahead of time also simplifies operational management by reducing the risks associated with resource provisioning during peak times.

Flexibility

While you’re committing to a term, AWS still offers some flexibility in the context of instance sizes. For example, size flexibility allows you to adjust the instance size as your needs change without altering the advantages of the reservation. However, you do have to stay within the same instance family and database engine. AWS uses a normalization factor to define the scaling of RDS RIs for Instance Size Flexibility. The image below represents the normalization factors for several instance types.

Image source: RDS Reserved Instance documentation 

Understanding and using RDS Reserved Instances effectively can position you for optimized cost management and operational efficiency in your AWS environment. 

Limitations of RDS Reserved Instances

Although Reserved Instances offer substantial savings on Amazon RDS usage, it’s important to understand their limitations before purchasing.

Upfront commitment

You’re making a commitment when opting for Reserved Instances. This means you agree to use and pay for the instance over a set period (one or three years). While you benefit from a reduced hourly rate compared to On-Demand Instances, the commitment and initial upfront payment (if chosen) can be a major consideration for cloud management.

Non-refundable

Reserved DB Instances are generally non-refundable, so they need careful planning before purchase. Once you’ve paid for a Reserved Instance, AWS does not offer a refund or credit for the upfront payment, even if you no longer need the reserved capacity. And unlike EC2 RIs, you can’t sell RDS RIs in the marketplace or modify them via the Convertible RI Exchange process.

Geographic and instance-type inflexibility

Each Reserved Instance is restricted to a specific AWS region and instance type. If your workloads shift to a different region or require a different instance type, the Reserved Instance can’t flex to accommodate these changes. This lock-in can lead to cost inefficiencies if you don’t keep a close eye on your usage patterns.

Potential for cost inefficiencies

While RDS Reserved Instances can lead to savings, they can also create cost inefficiencies if you don’t use them optimally. If you underutilize the Reserved Instance during the term, you still have to pay for those unused commitments. 

Conversely, if your usage exceeds the RI or requires different instance types, you’ll incur on-demand rates. Both ways, you lose money. This is why it’s important to thoroughly analyze your usage patterns to maximize your savings and prevent waste.

Complexity in management

Managing Reserved Instances also introduces complexity: 

  • Keeping track of your Reserved versus On-Demand Instances
  • Monitoring utilization vs. coverage analysis
  • Preventing under-usage of RIs
  • Gaining RI visibility using tools like the AWS Management Console or the AWS CLI

These all become additional tasks within your operations. Therefore, thoroughly understanding the fundamentals of RDS RIs and automating RI management becomes crucial.

Refine Reserved Instance management with ProsperOps

Managing RDS Reserved Instances can be a juggling act. RIs can maximize your savings, but this comes with the complexity of forecasting usage and handling ever-changing commitments. 

This is where ProsperOps steps in: to simplify the process and enhance cost optimization. 

ProsperOps delivers cloud savings-as-a-service. Our platform automatically blends discount instruments to maximize your savings while minimizing commitment risk.

Our automated FinOps platform streamlines cloud cost management by eliminating the effort and latency involved in manually managing rigid, long-term discount instruments.

We achieve this without disrupting your financial or engineering processes, reducing friction and allowing your team to focus on their day-to-day duties.

With ProsperOps, you pay nothing unless we save you money!

Ready to take control of your RDS RI cost management strategy? See ProsperOps in action — request a demo today.

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