The benefits and drawbacks of AWS Convertible Reserved Instances

Almost a year ago, AWS unveiled a new version of its well-known Reserved Instances pricing model: AWS Convertible Reserved Instances. Classic Reserved Instances limit users' options for modifications, but the Convertible option gives them more flexibility, albeit at a premium.

Customers purchase standard RIs for a period of one or three years, but they have limited options for modifications. Each standard RI restricts a user to a specific instance family, such as the M4 instance, and it only allows modification of the instance size, such as sizing down from an m4.2xlarge to m4.large. *AWS also limits RIs to a specific availability zone within a certain region, though a regional benefit feature enables users to get the RI discount in any AZ in the region in return for giving up the benefit of reserved capacity when needed. Users who commit long term to an instance family will be limited even if their computing needs change. For example, back-end instances that run Java require intensive RAM, while an upgrade of the back end to Node.js requires a CPU-intensive instance.

Standard RIs also hold users to a particular technology generation. If AWS offers an M5 instance family in the future, users who purchased RIs for the M4 family are stuck with a previous-generation instance until the end of their RI term.

AWS Convertible Reserved Instances offer the flexibility to change an instance family during the contract term. For example, if a customer purchases a three-year Convertible RI for the R4 instance family, he can modify it at any time during that period to a C4 instance family. A markup applies to the remaining term of the RI if there is a price difference between the instance families.

AWS Convertible Reserved Instances offer the flexibility to change an instance family during the contract term.

This flexibility comes at a price, however. AWS Convertible Reserved Instances offer less of a comparable discount than standard RIs when you consider On-Demand pricing. For example, a three-year, all-upfront, standard RI for an r4.large instance in U.S.-East regions comes with a nominal discount of 62%, while AWS Convertible Reserved Instances with the same parameters come with nominal discounts of 55%.

* - This paragraph was changed after publication.