Amazon Web Services adds option to reserve capacity on cloud

The new pricing policy is an add-on the existing price structure and maintains the pay-as-you-go format

Amazon Web Services began Thursday giving customers in the United States the ability to reserve capacity in advance on its Elastic Compute Cloud infrastructure for the first time.

The new pricing, called Reserved Instance, is an additional pricing model to the company's pay-as-you-go pricing, said AWS spokeswoman Kay Kinton. Like its current pricing model, customers will still only pay for the compute capacity they consume, she said.

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Under the new pricing, customers pay once to reserve capacity on EC2 in either one- or three-year terms. If they find they will need more usage than has already been reserved and paid for, they can also add more capacity via the on-demand model and pay for that as needed.

Reserving computing capacity is a good option for customers who have predictable computing needs and plan for that usage in their IT budgets ahead of time, Kinton said. AWS added the pricing model at the request of some larger customers who told them that reserving capacity "more closely aligns with how they budget for IT," she said.

For companies that can use reserved-capacity pricing, it actually reduces their IT costs, she said. For instance, AWS charges 10 cents per hour for what it calls a "small" On-Demand Instance on EC2. A comparable IT deployment using a one-year Reserved Instance pricing costs $325, while a three-year costs $500. That reserved pricing works out to be 3 cents per hour, according to an AWS pricing chart.

More information and a pricing chart for AWS' EC2 service can be found online.

The new pricing is currently only available in the United States, but AWS expects to offer it to European customers soon, Kinton said. AWS began offering its EC2 service to Europe in December.