What is Reserved Instance?
Also known as: RI
A Reserved Instance is a billing discount applied to compute usage when a customer commits to a 1 or 3-year term, paying upfront, partially upfront, or monthly.
A Reserved Instance (RI) is a pricing model offered by cloud providers such as AWS, Microsoft Azure, and Google Cloud. It allows a customer to reserve compute capacity for a fixed term of one or three years in exchange for a significant discount over on-demand rates. The discount applies to the hourly usage of instance types that match the reservation attributes: instance family, region, tenancy, and operating system.
When a customer purchases an RI, they choose a payment option: All Upfront, Partial Upfront, or No Upfront. All Upfront provides the largest discount (often 60-72% off on-demand) but requires full payment at purchase. Partial Upfront and No Upfront reduce the discount but lower the initial cost. The reserved capacity is not a guarantee of instance availability in all cases; standard RIs provide a capacity reservation only in specific Availability Zones when explicitly selected. Convertible RIs allow changing instance attributes during the term, with a smaller discount.
The RI model sits between on-demand pricing and spot instances in the cloud cost hierarchy. It is ideal for steady-state workloads with predictable resource needs, such as production databases, web servers, or batch processing jobs. Cloud providers use RIs to improve capacity planning and offer customers lower costs in return for commitment. RI purchases can be managed through the provider's console, APIs, or third-party cost management tools.
Key facts
- RI terms are 1 year or 3 years, with 3-year terms offering higher discounts.
- Payment options: All Upfront, Partial Upfront, or No Upfront.
- Standard RIs lock instance family, region, and OS; Convertible RIs allow changes.
- RI discounts apply automatically to matching running instances in the account.
- Unused RIs can be sold on the AWS Reserved Instance Marketplace (AWS only).
How it works in practice
Related terms
References
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