How billing works with Reserved Instances

All Reserved Instances provide you with a discount compared to On-Demand pricing. With Reserved Instances, you pay for the entire term regardless of actual use. You can choose to pay for your Reserved Instance upfront, partially upfront, or monthly, depending on the payment option specified for the Reserved Instance.

When Reserved Instances expire, you are charged On-Demand rates for EC2 instance usage. You can queue a Reserved Instance for purchase up to three years in advance. This can help you ensure that you have uninterrupted coverage. For more information, see Queue your purchase.

The AWS Free Tier is available for new AWS accounts. If you are using the AWS Free Tier to run Amazon EC2 instances, and you purchase a Reserved Instance, you are charged the standard pricing. For information, see AWS Free Tier.

Usage billing

Reserved Instances are billed for every clock-hour during the term that you select, regardless of whether an instance is running. Each clock-hour starts on the hour (zero minutes and zero seconds past the hour) of a standard 24-hour clock. For example, 1:00:00 to 1:59:59 is one clock-hour. For more information about instance states, see Amazon EC2 instance state changes.

A Reserved Instance billing benefit can be applied to a running instance on a per-second basis. Per-second billing is available for instances using an open-source Linux distribution, such as Amazon Linux and Ubuntu. Per-hour billing is used for commercial Linux distributions, such as Red Hat Enterprise Linux and SUSE Linux Enterprise Server.

A Reserved Instance billing benefit can apply to a maximum of 3600 seconds (one hour) of instance usage per clock-hour. You can run multiple instances concurrently, but can only receive the benefit of the Reserved Instance discount for a total of 3600 seconds per clock-hour; instance usage that exceeds 3600 seconds in a clock-hour is billed at the On-Demand rate.

For example, if you purchase one m4.xlarge Reserved Instance and run four m4.xlarge instances concurrently for one hour, one instance is charged at one hour of Reserved Instance usage and the other three instances are charged at three hours of On-Demand usage.

However, if you purchase one m4.xlarge Reserved Instance and run four m4.xlarge instances for 15 minutes (900 seconds) each within the same hour, the total running time for the instances is one hour, which results in one hour of Reserved Instance usage and 0 hours of On-Demand usage.

If multiple eligible instances are running concurrently, the Reserved Instance billing benefit is applied to all the instances at the same time up to a maximum of 3600 seconds in a clock-hour; thereafter, On-Demand rates apply.

Cost Explorer on the Billing and Cost Management console enables you to analyze the savings against running On-Demand Instances. The Reserved Instances FAQ includes an example of a list value calculation.

If you close your AWS account, On-Demand billing for your resources stops. However, if you have any Reserved Instances in your account, you continue to receive a bill for these until they expire.

Viewing your bill

You can find out about the charges and fees to your account by viewing the AWS Billing and Cost Management console.

You can view the charges online, or you can download a CSV file.

You can also track your Reserved Instance utilization using the AWS Cost and Usage Report. For more information, see Reserved Instances under Cost and Usage Report in the AWS Billing User Guide.

Reserved Instances and consolidated billing

The pricing benefits of Reserved Instances are shared when the purchasing account is part of a set of accounts billed under one consolidated billing payer account. The instance usage across all member accounts is aggregated in the payer account every month. This is typically useful for companies in which there are different functional teams or groups; then, the normal Reserved Instance logic is applied to calculate the bill. For more information, see Consolidated billing for AWS Organizations.

If you close the account that purchased the Reserved Instance, the payer account is charged for the Reserved Instance until the Reserved Instance expires. After the closed account is permanently deleted in 90 days, the member accounts no longer benefit from the Reserved Instance billing discount.

Reserved Instance discount pricing tiers

If your account qualifies for a discount pricing tier, it automatically receives discounts on upfront and instance usage fees for Reserved Instance purchases that you make within that tier level from that point on. To qualify for a discount, the list value of your Reserved Instances in the Region must be $500,000 USD or more.

The following rules apply:

Calculate Reserved Instance pricing discounts

You can determine the pricing tier for your account by calculating the list value for all of your Reserved Instances in a Region. Multiply the hourly recurring price for each reservation by the total number of hours for the term and add the undiscounted upfront price (also known as the fixed price) at the time of purchase. Because the list value is based on undiscounted (public) pricing, it is not affected if you qualify for a volume discount or if the price drops after you buy your Reserved Instances.

List value = fixed price + (undiscounted recurring hourly price * hours in term)

For example, for a 1-year Partial Upfront t2.small Reserved Instance, assume the upfront price is $60.00 and the hourly rate is $0.007. This provides a list value of $121.32.

121.32 = 60.00 + (0.007 * 8760)

To view the fixed price values for Reserved Instances using the command line

Buy with a discount tier

When you buy Reserved Instances, Amazon EC2 automatically applies any discounts to the part of your purchase that falls within a discount pricing tier. You don't need to do anything differently, and you can buy Reserved Instances using any of the Amazon EC2 tools. For more information, see Buy Reserved Instances for Amazon EC2.

After the list value of your active Reserved Instances in a Region crosses into a discount pricing tier, any future purchase of Reserved Instances in that Region are charged at a discounted rate. If a single purchase of Reserved Instances in a Region takes you over the threshold of a discount tier, then the portion of the purchase that is above the price threshold is charged at the discounted rate. For more information about the temporary Reserved Instance IDs that are created during the purchase process, see Crossing pricing tiers.

If your list value falls below the price point for that discount pricing tier—for example, if some of your Reserved Instances expire—future purchases of Reserved Instances in the Region are not discounted. However, you continue to get the discount applied against any Reserved Instances that were originally purchased within the discount pricing tier.

When you buy Reserved Instances, one of four possible scenarios occurs:

Crossing pricing tiers

If your purchase crosses into a discounted pricing tier, you see multiple entries for that purchase: one for that part of the purchase charged at the regular price, and another for that part of the purchase charged at the applicable discounted rate.

The Reserved Instance service generates several Reserved Instance IDs because your purchase crossed from an undiscounted tier, or from one discounted tier to another. There is an ID for each set of reservations in a tier. Consequently, the ID returned by your purchase CLI command or API action is different from the actual ID of the new Reserved Instances.

Consolidated billing for pricing tiers

A consolidated billing account aggregates the list value of member accounts within a Region. When the list value of all active Reserved Instances for the consolidated billing account reaches a discount pricing tier, any Reserved Instances purchased after this point by any member of the consolidated billing account are charged at the discounted rate (as long as the list value for that consolidated account stays above the discount pricing tier threshold). For more information, see Reserved Instances and consolidated billing.