3.27 The different types of AWS instance launch

This lesson reviews the different EC2 launch types and how they impact pricing and behavior. On-demand instances are the default: you pay per second from the first minute, with no upfront cost and no commitment, but they remain the most expensive option. They are ideal for short or unpredictable workloads. Reserved instances require at least a one-year subscription and offer up to 75% discount versus on-demand pricing.

Reserved instance variants

  • Standard reserved: 1 or 3 years, locked to a specific instance type, cheapest reservation.
  • Convertible reserved: same commitment but you can change the instance type during the term.
  • Scheduled reserved: only active on a recurring schedule (e.g. every Thursday 3pm–6pm).
  • Spot instances: up to 90% off, allocated through bidding — AWS reclaims the instance when the market price exceeds your maximum bid.
  • Dedicated instances: physical server shared only with your AWS account, no other tenants.
  • Dedicated hosts: full physical server with visibility on sockets and cores, ideal for Oracle / per-socket licensing.

Spot instances are perfect for non-critical, interruptible workloads: data analysis, batch jobs, image processing, dev/test pipelines. They never suit production databases or long-running stateful workloads. A common pattern combines reserved instances for the baseline infrastructure, on-demand instances for elasticity, and spot instances for opportunistic batch processing — you get robustness, flexibility, and cost savings at once.

The pricing matrix is striking: a c4.large on-demand at $0.10/h can drop to $0.072 reserved 12 months, $0.058 with upfront payment, $0.043 reserved over 36 months, and as low as $0.01 on spot. Dedicated hosts with reservation can be 70% cheaper than on-demand. You don't need to memorize the numbers; you just need to know that picking the right launch type unlocks 5% to 90% savings. In the following lessons we will explore spot requests in depth, then dedicated hosts in practice.

Summary

This lesson covers the six main types of AWS instance launches, each designed for different workload patterns and budgets. On-demand instances offer flexibility with pay-as-you-go pricing, while reserved instances provide significant savings (30-75%) for committed 1-3 year deployments. Spot instances deliver up to 90% cost reduction for fault-tolerant workloads through an auction-based model, and dedicated instances or hosts serve organizations with strict isolation or licensing requirements.

Key points

  • On-demand instances are best for unpredictable or intermittent workloads, with billing from the first second and no long-term commitment
  • Reserved instances (classic and convertible) suit stable, long-running applications like database servers with up to 75% cost savings versus on-demand
  • Scheduled reserved instances let you define specific usage patterns (e.g., database running once weekly) for periodic workloads at reduced cost
  • Spot instances offer up to 90% savings through an auction-based bidding system but can terminate if market price exceeds your bid
  • Dedicated instances provide organizational-level isolation, while dedicated hosts offer complete server control—essential for software licensing compliance
  • Instance type selection depends on workload predictability: on-demand for unpredictable loads, reserved for stable operations, spot for fault-tolerant batch jobs

FAQ

What is the main difference between reserved instances and on-demand instances?

Reserved instances require a 1-3 year upfront commitment but cost 30-75% less than on-demand instances, ideal for predictable workloads. On-demand instances charge per second with no commitment, suiting sporadic or unpredictable usage.

How do spot instances work, and when should I use them?

Spot instances use an auction model where you bid a maximum price; if the market price exceeds your bid, the instance terminates. They save up to 90% and are ideal for fault-tolerant workloads like batch processing, data analysis, and image processing.

What is the difference between dedicated instances and dedicated hosts?

Dedicated instances isolate your instances on hardware not shared with other organizations (but may share with your organization). Dedicated hosts reserve an entire physical server with placement control, useful for managing software licensing or maintaining strict hardware compliance.