We conducted an elaborate research study that covered AWS EC2 price changes from the time we started Cloudyn five years ago. We’ve managed to aggregate all EC2 price changes into a single list, and after some analysis, found that the prices of most EC2 families have not been altered for over a year (as of 2015). While it seems like AWS has stopped dropping prices, it now offers higher performing machines for no extra charge. In this article, we will review how EC2 prices have changed over the years and try to understand the AWS logic behind them.
EC2 prices are based on instance family, size, OS, region and pricing model (i.e., on-demand, RI, Spot). And single EC2 instance prices range from a few cents (e.g., for a micro instance) to a few bucks (e.g., R3 and D2 families). From our research, it seems like the last EC2 price reduction for veteran instance families was quite a while ago (in terms of AWS development), in March 2014. Let’s look at how prices have changed for m1.large instances over the years:
As you can see, over a four year timeframe, AWS cut the price of one of their most popular instances in two, from $0.46 to $0.23. But its price has remained the same for the past two years.
Since then, AWS has reduced its data transfer prices, storage prices and EC2 prices for the M3 and C4 family types, which are relatively new. Both types’ prices were lowered by 5% in almost all regions for On-Demand and single year RIs.
One of the major drivers to cut costs in the cloud is competition. In April 2014, Google slashed its prices by 30%, and introduced its “Sustained Use Discount”, which offers a discount for On-Demand rates, and has also officially stated that it drops prices in accordance with Moore’s Law. In contrast, Microsoft Azure doesn’t publicly offer discounts, and uses Microsoft’s Enterprise Agreements to provide custom discounts. However, because AWS is the definitive leader of the public cloud, competition might not be the main incentive to cut costs. If you look at the cost-for-performance (e.g., $/hour per CPU core or per GB RAM), AWS did drop its prices when it introduced the new M3 and M4 instance families. And when compared to previous generation M1 instances, M3 and M4 provide higher, more consistent compute performance at a lower price.
That being said, it is important to note that previous generation instances (e.g., M1, M2, etc.) still have very important advantages. Until the M4 family was introduced, m1.large was the cheapest instance to offer an EBS-Optimized option. Today, the M4 instance performs better, on average, than previous generations, but M1 offers a huge ephemeral local disk (2 x 420GB). M4, on the other hand, only comes with EBS and doesn’t have any ephemeral disks. If required, disks can be purchased separately, which might turn out to be more expensive and introduce somewhat higher latency than with ephemeral storage.
According to the AWS calculator:
If you strictly look at costs, you may interpret Amazon’s price stagnance as a signal to users to migrate to newer machines…but why? Perhaps AWS is decommissioning older hardware and making physical space for newer, more efficient equipment. Users that have been using M1 instances for a few years may have a number of dependencies on hardware and middleware, which, in turn, introduce great difficulties when it comes to migration. However, they should seriously consider the great benefits that migration holds.
As AWS matures, it will continue to add new instance types to the EC2 catalog. Last month, at AWS re:Invent 2015, the t2.nano instance was announced, which is yet another addition to the low cost/burstable performance instance family. What’s more, the X1 (monster!) instance family was announced for release in 2016, as an option for enterprises running massive in-memory databases, with up to 2TB of RAM! Although it can be challenging to follow AWS’ amazing pace of innovation and release, we strongly suggest keeping an eye on new resource opportunities, and making sure your system is developed and maintained in a way that will enable simple migration when necessary.
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