# Savings Plans vs Reserved Instances: Which to Buy in 2026

> AWS now calls Reserved Instances the older option. What each commitment covers, what it costs on a real instance, and how to size it so the discount holds.

Source: https://levelfour.ai/blog/savings-plans-vs-reserved-instances

Updated: 2026-10-24

October 24, 2026. By [Bruno Rocha](https://www.linkedin.com/in/brunorochadasilva/), Founder.

Buy Savings Plans for EC2, Fargate, and Lambda. AWS now recommends Savings Plans over Reserved Instances, and for an m7i.xlarge on any term and payment option, an EC2 Instance Savings Plan charges the same hourly rate as a Standard Reserved Instance while covering any size, operating system, and tenancy in its family. Keep Reserved Instances for what Savings Plans don't reach: services with no Savings Plan, such as Redshift's provisioned clusters, and zonal RIs when you need capacity held in one Availability Zone. Then size the commitment to the usage you never drop below, not to your peak.

Below: what each option covers, what each costs on one real instance, the order AWS applies them in, and a worked example of sizing a commitment. Prices are AWS's own, from its pricing APIs on October 24, 2026.

## Savings Plans vs Reserved Instances at a glance

|  | Compute Savings Plans | EC2 Instance Savings Plans | Standard RIs | Convertible RIs |
| --- | --- | --- | --- | --- |
| You commit to | A dollar amount per hour | A dollar amount per hour | An instance configuration | An instance configuration |
| Covers | EC2 in any family, size, Region, OS, or tenancy, plus Fargate and Lambda | One instance family in one Region, any size, OS, or tenancy | One instance type in one Region (size-flexible within the family for regional Linux RIs), or one Availability Zone | One instance type in one Region (size-flexible within the family for regional Linux RIs), or one Availability Zone |
| Discount, up to | 66% | 72% | 72% | 66% |
| Terms and payment | 1 or 3 years; all, partial, or no upfront | 1 or 3 years; all, partial, or no upfront | 1 or 3 years; all, partial, or no upfront | 1 or 3 years; all, partial, or no upfront |
| Change it later | Return within 7 days if $100 an hour or less | Return within 7 days if $100 an hour or less | Modify, or sell on the RI Marketplace | Exchange for another Convertible RI |
| Reserves capacity | No | No | Zonal RIs only | Zonal RIs only |

Sources: AWS Savings Plans and EC2 Reserved Instances documentation, October 2026.

AWS's own words, from the EC2 Reserved Instances page: "We recommend Savings Plans over Reserved Instances." [EC2 Reserved Instances](https://docs.aws.amazon.com/AWSEC2/latest/UserGuide/ec2-reserved-instances.html). Its EC2 purchasing decision guide, updated June 22, 2026, calls Reserved Instances an older purchasing option, warns that newer EC2 instance families might not support Reserved Instance pricing, and suggests RIs only for services no Savings Plan covers. [AWS decision guide](https://docs.aws.amazon.com/decision-guides/latest/decision-guides/ec2-purchasing-options-aws-how-to-choose.html).

## What does each option cost on a real instance?

Take one m7i.xlarge, 4 vCPUs and 16 GiB, running Linux all month in us-east-1. These are AWS's published rates for it.

| Option | Per hour | Per month | Off On-Demand |
| --- | --- | --- | --- |
| On-Demand | $0.2016 | $147.17 | 0% |
| Compute Savings Plan, 1 year, no upfront | $0.14811 | $108.12 | 26.5% |
| Convertible RI, 1 year, no upfront | $0.14811 | $108.12 | 26.5% |
| EC2 Instance Savings Plan, 1 year, no upfront | $0.13336 | $97.35 | 33.8% |
| Standard RI, 1 year, no upfront | $0.13336 | $97.35 | 33.8% |
| Compute Savings Plan, 3 years, no upfront | $0.10224 | $74.64 | 49.3% |
| EC2 Instance Savings Plan, 3 years, no upfront | $0.09145 | $66.76 | 54.6% |
| EC2 Instance Savings Plan, 3 years, all upfront | $0.07959 | $58.10 | 60.5% |

m7i.xlarge, Linux, shared tenancy, us-east-1, from the AWS Price List and Savings Plans APIs on October 24, 2026. 730 hours a month.

Two things stand out. The Savings Plan and the Reserved Instance of the same kind charge the same rate, so on this instance you give up no discount by choosing the plan that covers more of your fleet. And flexibility has a price: the Compute Savings Plan saves 26.5% on one year against 33.8% for the EC2 Instance Savings Plan. That gap pays for moving freely between families, Regions, Fargate, and Lambda. If you plan to move this workload to Graviton or to a C-family instance within the term, an EC2 Instance Savings Plan for M7i would stop covering it.

## Which Savings Plans can you buy in 2026?

AWS documents four types. [Savings Plans types](https://docs.aws.amazon.com/savingsplans/latest/userguide/plan-types.html).

- Compute Savings Plans, up to 66% off: EC2 in any family, size, Region, operating system, or tenancy, plus Fargate and Lambda.
- EC2 Instance Savings Plans, up to 72% off: one instance family in one Region, at any size, operating system, or tenancy.
- SageMaker AI Savings Plans, up to 64% off SageMaker AI usage.
- Database Savings Plans, launched on December 2, 2025, up to 35% off: Aurora, RDS, DynamoDB, ElastiCache for Valkey, DocumentDB, Timestream, Neptune, Keyspaces, DMS, and OpenSearch. The ceiling depends on the usage: 35% for serverless, 20% for provisioned instances, 18% for DynamoDB and Keyspaces on-demand, and 12% for provisioned capacity. They come as 1-year, no-upfront plans. [AWS announcement](https://aws.amazon.com/blogs/aws/introducing-database-savings-plans-for-aws-databases/) · [Database Savings Plans pricing](https://aws.amazon.com/savingsplans/database-pricing/).

Savings Plans don't apply to Spot usage or to usage a Reserved Instance already covers, and they hold no capacity. When you need capacity guaranteed, AWS pairs them with On-Demand Capacity Reservations. [Savings Plans and RIs](https://docs.aws.amazon.com/savingsplans/latest/userguide/sp-ris.html).

## When do Reserved Instances still make sense?

- Services no Savings Plan covers. AWS names Redshift's provisioned clusters, where reserved nodes save about 20% with no upfront and 42% to 76% all upfront. [Redshift reserved nodes](https://docs.aws.amazon.com/redshift/latest/mgmt/purchase-reserved-node-instance.html).
- Capacity held in one Availability Zone, which zonal RIs give and Savings Plans don't. A zonal RI loses size flexibility in exchange. [RI scope](https://docs.aws.amazon.com/AWSEC2/latest/UserGuide/reserved-instances-scope.html).
- Reservations you may want to resell. Only EC2 Standard RIs sell on the Reserved Instance Marketplace, after 30 days and with at least a month left, for a 12% fee on the upfront price, from a seller whose bank has a US address. [RI Marketplace](https://docs.aws.amazon.com/AWSEC2/latest/UserGuide/ri-market-general.html).
- DynamoDB reserved capacity for provisioned tables on the Standard table class, sold in blocks of 100 units, up to 54% off for 1 year and 77% for 3 years in some Regions. It can't be sold, cancelled, or transferred. [DynamoDB reserved capacity](https://docs.aws.amazon.com/amazondynamodb/latest/developerguide/reserved-capacity.html).

For databases, AWS's Savings Plans FAQ says: "We recommend that you switch from Reserved Instances to Database Savings Plans as your Reserved Instance commitments expire," and a Database Savings Plan can't stack with an RI on the same workload. [Savings Plans FAQ](https://aws.amazon.com/savingsplans/faq/). RDS, ElastiCache, OpenSearch, and MemoryDB still sell reservations. [Reservation reports](https://docs.aws.amazon.com/cost-management/latest/userguide/ce-ris.html).

## In what order does AWS apply RIs and Savings Plans?

Every hour, AWS applies Reserved Instances first, then EC2 Instance Savings Plans, then Compute Savings Plans. Within each, the usage with the highest savings percentage goes first. Commitment you don't use in an hour is gone; it doesn't carry over to the next one. With sharing on in an organization, the account that owns the plan gets covered first. [How Savings Plans apply](https://docs.aws.amazon.com/savingsplans/latest/userguide/sp-applying.html).

The order matters when you mix both. A new Compute Savings Plan bought on top of RIs that already cover your steady instances has less usage left to cover than its recommendation assumed, and its utilization drops.

## How much should you commit? A worked example

Three numbers tell you whether a commitment works ([coverage and utilization](https://levelfour.ai/glossary/commitment-coverage-and-utilization.md) in our glossary). Utilization is the share of the commitment you used. [Utilization report](https://docs.aws.amazon.com/savingsplans/latest/userguide/ce-sp-usingPR.html). Coverage is the share of eligible usage the commitment covered, at On-Demand value. [Coverage report](https://docs.aws.amazon.com/savingsplans/latest/userguide/ce-sp-cr-metrics.html). Effective savings rate is what you saved divided by what the same usage would have cost On-Demand, as the FinOps Foundation defines it. [Effective Savings Rate](https://www.finops.org/wg/how-to-calculate-effective-savings-rate-esr/).

Say you run ten m7i.xlarge instances for 12 hours of the day and five for the other 12. On-Demand, that costs $36.29 a day, or $1,088.64 over 30 days. You buy a 1-year, no-upfront Compute Savings Plan, which covers an instance-hour at $0.14811, and you weigh two sizes.

| Commitment | Daytime (10 instances) | Night (5 instances) | Utilization | Coverage | Effective savings rate | 30 days |
| --- | --- | --- | --- | --- | --- | --- |
| $1.00 an hour, sized to the peak | Covers 6.75 instances; 3.25 run On-Demand | Covers all 5; $0.26 an hour unused | 87.0% | 78.3% | 12.2% | $955.75 |
| $0.75 an hour, sized to the floor | Covers 5.06 instances; 4.94 run On-Demand | Covers all 5; $0.01 an hour unused | 99.4% | 67.1% | 17.5% | $898.25 |

m7i.xlarge, Linux, shared tenancy, us-east-1, from the AWS Price List and Savings Plans APIs on October 24, 2026. 730 hours a month. On-Demand for the same usage: $1,088.64 over 30 days.

The smaller commitment covers less of your usage and saves more money. Every night the larger one pays for $0.26 an hour of commitment nobody uses, and that waste eats the discount. Commit to the usage you never drop below, let the peak run On-Demand or on Spot, and add commitment as the floor rises.

## What about Spot and credits?

Spot Instances cost up to 90% less than On-Demand, and AWS can reclaim them with a two-minute notice, so they suit work that can stop and restart. [EC2 Spot](https://aws.amazon.com/ec2/spot/) · [Spot interruption notices](https://docs.aws.amazon.com/AWSEC2/latest/UserGuide/spot-instance-termination-notices.html). Savings Plans don't apply to Spot usage. Startups can apply for AWS Activate credits: up to $5,000 through Activate Founders and up to $200,000 through Activate Portfolio, for companies before Series B founded in the last 10 years. [AWS Activate](https://aws.amazon.com/startups/credits).

## How do you buy and renew commitments without the spreadsheet?

- Savings Plans recommendations in the Billing and Cost Management console, and through the `GetSavingsPlansPurchaseRecommendation` API. [Savings Plans recommendations](https://docs.aws.amazon.com/savingsplans/latest/userguide/sp-recommendations.html).
- Reserved Instance recommendations, and expiry alerts 7, 30, or 60 days before an RI ends, in Cost Explorer. RIs don't renew on their own. [RI reports](https://docs.aws.amazon.com/cost-management/latest/userguide/ce-ris.html) · [EC2 Reserved Instances](https://docs.aws.amazon.com/AWSEC2/latest/UserGuide/ec2-reserved-instances.html).
- AWS Budgets templates for daily Savings Plans coverage and daily reservation utilization, so a drop reaches you by email. [Budget templates](https://docs.aws.amazon.com/cost-management/latest/userguide/budget-templates.html).
- Third-party tools that buy and adjust commitments for you: ProsperOps, nOps, Vantage, Archera, Zesty, DoiT, and LevelFour. We compare them in [The Best AWS Cost Optimization Tools in 2026](https://levelfour.ai/blog/best-aws-cost-optimization-tools.md).

## Common mistakes with Savings Plans and Reserved Instances

- Sizing the commitment to the peak. Unused commitment is lost every hour, as the example above shows.
- Committing before rightsizing, which locks a discount onto capacity you don't need. AWS's decision guide says to rightsize first, and [How to reduce your AWS bill](https://levelfour.ai/blog/how-to-reduce-aws-costs.md) covers what to clean up before you commit.
- Buying an EC2 Instance Savings Plan for a family you plan to leave during the term, such as M7i before a move to Graviton.
- Buying a Savings Plan without counting the RIs that apply before it, so the plan covers less than its recommendation said.
- Letting RIs lapse. They don't renew, and the usage falls back to On-Demand the next hour.

LevelFour [buys and renews Savings Plans and Reserved Instances](https://docs.levelfour.ai/commitments), sized to what your usage needs, and resells the Reserved Instances you no longer use, alongside savings across 53 AWS services. [See what LevelFour can save you](https://levelfour.ai/sign-up) in 5 minutes, with read-only access.

## Frequently asked questions

### Should I buy Savings Plans or Reserved Instances?

For EC2, Fargate, and Lambda, buy Savings Plans: AWS recommends them over Reserved Instances, and they cover more of your usage at the same rate. Buy Reserved Instances for services no Savings Plan covers, such as Redshift's provisioned clusters, and zonal RIs when you need capacity held in one Availability Zone.

### Are Savings Plans cheaper than Reserved Instances?

AWS calls the rates similar. For an m7i.xlarge in us-east-1 they match on every term and payment option: on a 1-year, no-upfront term, an EC2 Instance Savings Plan and a Standard RI both charge $0.13336 an hour, and a Compute Savings Plan and a Convertible RI both charge $0.14811. Check your own instance types before you assume the same.

### Can Savings Plans and Reserved Instances cover the same usage?

No. Each hour, AWS applies Reserved Instances first, then EC2 Instance Savings Plans, then Compute Savings Plans, and a Savings Plan covers only usage no RI has covered. Database Savings Plans can't stack with an RI on the same workload.

### What happens to unused Savings Plans commitment?

You pay for it, and it doesn't carry over to the next hour. A Savings Plan of $100 an hour or less can be returned within 7 days of purchase, in the same calendar month. [Returning a Savings Plan](https://docs.aws.amazon.com/savingsplans/latest/userguide/return-sp.html).

### Do Savings Plans reserve capacity?

No. Zonal Reserved Instances hold capacity in one Availability Zone, and AWS pairs Savings Plans with On-Demand Capacity Reservations when you need capacity guaranteed.

### Can I sell Savings Plans or Reserved Instances?

AWS lets you sell only EC2 Standard Reserved Instances, on the Reserved Instance Marketplace, once they have been active for 30 days and have at least a month left. AWS charges a 12% fee on the upfront price. [Selling on the RI Marketplace](https://docs.aws.amazon.com/AWSEC2/latest/UserGuide/ri-market-general.html).

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