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Mastering Cloud Economics

How to dramatically reduce your EC2 bill.

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1The Risk vs Reward of Spot

Spot instances offer the biggest savings but introduce engineering challenges. You cannot run a standard database on a Spot instance, as sudden termination would cause data corruption. However, for background workers, image processing, or containerized microservices behind a load balancer, Spot instances are the holy grail of cost reduction.

2The Flexibility of Savings Plans

Historically, companies bought Standard Reserved Instances, locking themselves into a specific instance family (e.g., m5). If they needed to upgrade to m6 a year later, the RI was useless. Compute Savings Plans solve this by applying the discount to ANY compute usage, making them the modern standard for baseline cost reduction.

Pascual Vila

Pascual Vila

Frontend Instructor // Code Syllabus

Lesson Glossary

[01]On-Demand

Paying for compute capacity by the second with no long-term commitment.

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// On-Demand context

[02]Spot Instance

Unused EC2 capacity available at a steep discount, subject to a 2-minute interruption notice.

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// Spot Instance context

[03]Savings Plan

A flexible pricing model offering lower prices in exchange for a commitment to a consistent amount of usage (measured in $/hour) for a 1 or 3 year term.

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// Savings Plan context

[04]BYOL

Bring Your Own License; a model allowing you to use existing software licenses in the cloud.

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// BYOL context

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