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07-02-2025 / Cost Optimization Strategies / 10 mins.
You might wonder how companies using Amazon Web Services (AWS) waste more than $10 billion dollars annually. It's easy to ask yourself: "Why don't they just cut their spending?"
Well, it's because there's more to consider. AWS offers many options: more than 200 different services, for example. Amazon Elastic Compute Cloud (EC2) provides more than 300 AWS instance types spread across five unique instance families.
It's understandable that choosing which AWS instance family to use can feel overwhelming. You're not alone.
However, downsizing an instance by one level can reduce its cost by 50%, so choosing the right instance size and type is crucial for optimizing your AWS costs.
This guide aims to help you decide which instance type is right for your organization. It includes when to use each type and what factors you should consider.
You might wonder how companies using Amazon Web Services (AWS) waste more than $10 billion dollars annually. It's easy to ask yourself: "Why don't they just cut their spending?"
Well, it's because there's more to consider. AWS offers many options: more than 200 different services, for example. Amazon Elastic Compute Cloud (EC2) provides more than 300 AWS instance types spread across five unique instance families.
It's understandable that choosing which AWS instance family to use can feel overwhelming. You're not alone.
However, downsizing an instance by one level can reduce its cost by 50%, so choosing the right instance size and type is crucial for optimizing your AWS costs.
This guide aims to help you decide which instance type is right for your organization. It includes when to use each type and what factors you should consider.
An AWS instance is a virtual machine on the AWS platform that you can use to run cloud-based applications. Instead of buying a physical computer or server, you can use a cloud-based environment. Renting compute capacity on AWS can improve your costs, time to market, and time to value.
Instances differ in the CPU, RAM (memory), storage, and network capacity they offer. This is especially true with Amazon EC2.
Instances are virtualized, so you can dynamically scale compute capacity up or down to match the peak and valley demands your business generates. This auto-scaling feature gives EC2 its name: "Elastic." EC2 is the most widely used compute service in AWS, although there are 12 others.
The amount you pay will depend on the instance type you use in AWS.
We mentioned that instances are virtual servers. Like any virtual server, AWS instances run on a host machine. AWS offers virtually unlimited virtual host machines with diverse compute resources (CPU, RAM, storage, and bandwidth).
Different instances have different levels of compute resources, so some are better suited for specific workloads than others. AWS instances are grouped into different families. You can identify instance types by looking at their names, which consist of a letter, a number, and sometimes an additional letter.
The first letter is generally uppercase and indicates which family the AWS instance belongs to. It is followed by a number that indicates which generation the instance belongs to. The characteristics of families and generations vary. A lowercase letter after that number typically shows how AWS has optimized that instance type.
The letters include A, B, C, D, E, F, G, H, M, P, R, T, and X. AWS instance generations range from 1 to 6. For example, C4 refers to AWS instances in the fourth generation of the C family of AWS instances.
Instances in AWS are generally from the current generation. Additionally, there are low-cost alternatives based on previous-generation instances. These include:
This last option is a good alternative for workloads with low performance requirements. Even so, you can select the most energy-efficient types to save money. However, what you need is a balanced provisioning strategy.
AWS offers five different instance types, and the name of each family describes its recommended use case, as shown below:
Below is an overview of each instance family, including their characteristics and typical ideal use cases.
(Mac, T4g, T3, T3a, T2, M7g, M6g, M6i, M6in, M6a, M5, M5a, M5n, M5zn, M4, A1)
These instances offer a balanced amount of processing power for a wide variety of scalable use cases:
(C7g, C7gn, C6i, C6in, etc.)
Ideal for use cases that require high compute power, such as:
These instances are more cost-effective even for intensive tasks, with newer generations like C6g offering significant improvements thanks to Graviton2 processors.
(z1d, High-memory, X1, R5, R6g, etc.)
Designed for memory-intensive workloads:
(Vt1, F1, G3, G4ad, DL1, etc.)
Deliver sustained performance through the use of hardware accelerators:
(H1, D2, D3, I3, etc.)
Ideal for large data volumes:
Fixed Performance vs. Burstable Performance
For example, for small databases or web servers, burstable instances are suitable, while for video encoding or high-volume websites, fixed-performance instances are the best option.
AWS instance types come in a range of sizes, these include:
In addition to Amazon EC2, there are other AWS services with instances worth considering. AWS Relational Database Storage (Amazon RDS) offers three instance types based on memory and processing power requirements:
Just like Amazon EC2 instances, RDS instances are available in various sizes. They need to be rightsized to avoid exceeding your AWS budget.
Amazon EC2 offers four paid pricing options and a free tier. The free tier requires you to use only AWS Micro instances, with a maximum of 750 hours of t2.micro instances on Linux or Windows.
If you use paid instances, AWS updates its pricing frequently, so it's important to check the official Amazon EC2 instance pricing page.
Here is a summary of how Amazon EC2 pricing works:
They allow you to scale compute resources based on your application's needs.
This option is suitable for applications with unpredictable resource usage at different times.
They allow you to access Amazon EC2's excess capacity at up to one-tenth the cost of an On-Demand instance.
AWS can reclaim the instances with just a two-minute warning. However, you can pause and resume your work later. These instances are ideal for fault-tolerant workloads, or you can use a tool like Xosphere, which automatically optimizes your workloads between Spot and On-Demand instances depending on the price.
They allow you to commit to a specific monthly spend rather than a particular instance type or family, in exchange for discounts of up to 72% compared to On-Demand rates.
They provide a physical EC2 server for your exclusive use.
It is one of the fairest options, as you only pay for what you use.
Frust conducts an assessment of your consumption patterns, instance types, and families to calculate and develop the best plan to help you generate savings on your AWS costs.
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