Reserved Instance Savings Calculator
Compare an EC2 Reserved Instance against on-demand: effective hourly rate, discount, term savings and upfront break-even.
About Reserved Instance Savings Calculator
An RI is a billing discount, not a reservation of a machine, so the honest comparison amortises any upfront payment across the term's 8760 hours per year and adds the recurring hourly charge. Break-even is the point where accumulated hourly savings repay the upfront, which is why a partial-upfront RI on a workload you might retire in six months can lose money even though its effective rate looks better. Reserved Instances are a one-to-three-year cash commitment that keeps billing whether the instance runs or not, so the break-even month is the real risk metric, not the headline discount.
Formula
Reserved Instance Savings
effective rate = upfront ÷ (term years × 8760) + reserved hourly rate; break-even months = upfront ÷ ((on-demand − reserved hourly) × 730).
- 8760
- Hours in a year, the amortisation base for an RI term
- upfront
- One-off payment amortised across the whole term
- hourly gap
- Per-hour cash saving before the upfront is repaid
Worked example
With the default values below, Reserved Instance Savings Calculator returns Monthly Saving vs On-Demand of $255.65. Change any input above and every figure here is recalculated in your browser.
Inputs used
- On-demand rate per hourminimum 0 USD/hour
- 0.096 USD/hour
- Reserved hourly rateminimum 0 USD/hour
- 0.0305 USD/hour
- Upfront payment per instanceminimum 0 USD
- 267 USD
- Commitment termone of 1-year term, 3-year term
- 1-year term
- Instances coveredaccepts 1–10,000 instances
- 10 instances
Results
- Monthly Saving vs On-Demand
- $255.65
- Effective Reserved Rate per Hour
- $0.0610
- Discount vs On-Demand
- 36.5%
- Saving Over the Whole Term
- $3,067.80
- Upfront Break-Even
- 5.6 months
- On-Demand Cost for the Same Term
- $8,409.60
Step by step
- 1Values used
- 2Reserved Instance Savings
- 3Monthly Saving vs On-Demand= 255.65
- 4Effective Reserved Rate per Hour= 0.0610
- 5Discount vs On-Demand= 36.5
- 6Saving Over the Whole Term= 3,067.80
- 7Upfront Break-Even= 5.6 months
- 8On-Demand Cost for the Same Term= 8,409.60
Assumptions and limits
- The result is derived only from the 5 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation, tax or compounding frequency into account.
- Figures are rounded for display to 4 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Guides that use this calculator
Frequently Asked Questions
How is Reserved Instance Savings calculated?
effective rate = upfront ÷ (term years × 8760) + reserved hourly rate; break-even months = upfront ÷ ((on-demand − reserved hourly) × 730). An RI is a billing discount, not a reservation of a machine, so the honest comparison amortises any upfront payment across the term's 8760 hours per year and adds the recurring hourly charge. Break-even is the point where accumulated hourly savings repay the upfront, which is why a partial-upfront RI on a workload you might retire in six months can lose money even though its effective rate looks better.
Why does Reserved Instance Savings matter?
Reserved Instances are a one-to-three-year cash commitment that keeps billing whether the instance runs or not, so the break-even month is the real risk metric, not the headline discount.
What values do I need to enter?
This calculator takes 5 inputs: On-demand rate per hour, Reserved hourly rate, Upfront payment per instance, Commitment term, Instances covered. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.
Which payment option should I pick?
All-upfront gives the largest discount but the worst flexibility and the longest exposure; no-upfront gives the smallest discount with no cash at risk. Partial-upfront usually sits within a couple of points of all-upfront, which is why it is the common default. Enter your own quoted numbers — the ranking depends on family, region and term.