How to Purchase AWS Savings Plans (1 or 3 Year): Guide to Optimizing Cloud Costs

Managing AWS costs effectively is critical for organizations running scalable workloads. AWS Savings Plans provide a cost-effective way to reduce compute expenses without sacrificing flexibility.

Available in both 1-year and 3-year commitment terms, these plans offer significant savings compared to standard On-Demand rates, helping you optimize your cloud costs while maintaining the ability to scale.

Whether you're a startup on a budget or an enterprise managing thousands of EC2 instances, AWS Savings Plans help you better control and predict your compute spending.

In this guide, we'll show you how to purchase AWS Savings Plans to maximize ROI, control your cloud spend, and align costs with actual usage.

What Are AWS Savings Plans?

AWS Savings Plans are flexible pricing models that offer businesses a way to reduce compute costs by committing to a consistent hourly expenditure (measured in $/hour) over either a 1-year or 3-year period.

These plans provide a discounted rate in exchange for the commitment, allowing companies to align their cloud spending with projected compute usage across various AWS services.

Types Of AWS Savings Plans

There are two types of Savings Plans:

1. Compute Savings Plans

• Ultimate Flexibility: This plan allows you to use EC2, Fargate, Lambda, and more without being restricted to specific instance families or regions.
• Dynamic Workloads: Best for businesses that require adaptable compute resources or expect their needs to change over time.

2. EC2 Instance Savings Plans

• Deeper Discounts: With these plans, you get more significant savings but are limited to particular EC2 instance families and regions.
• Stable Workloads: Perfect for companies that have predictable and steady workloads, as you know what resources you’ll need over time.

Commitment Terms: What’s Right for You?

• 3-Year Term: If your computing needs are stable and predictable, the 3-year commitment gives you the highest savings, but with a longer financial commitment and less flexibility.
• 1-Year Term: The 1-year plan offers flexibility and is great if your workload may change, but the savings are not as high as the 3-year option.

Learn more in the Savings Plans documentation.

Prerequisites for AWS Savings Plans

Before purchasing a Savings Plan, ensure the following:

• Billing Access: Confirm billing permissions in your AWS account.
• Review Usage: Check your compute usage with AWS Cost Explorer.
• Financial Approval: Get approval for any financial commitments, especially for upfront payments.

Step-by-Step Guide to Purchase AWS Savings Plans (1-Year or 3-Year)

Step 1: Access the AWS Billing Console

• Sign in to your AWS Console.
• Navigate to the Billing Dashboard via the AWS service search.

• In the left navigation pane, click on Savings Plans.

Step 2: Review AWS Savings Plan Recommendations

• Go to Savings Plans > Recommendations.
• AWS will analyze your recent compute usage (7, 30, and 60 days) and offer suggestions for:
• • Commitment amount ($/hr)
  • Plan type (Compute or EC2 Instance)
  • Term (1-year or 3-year)
  • Payment option

Tip: Use these as a starting point, especially if you’re unsure how much to commit.

Step 3: Use the Purchase Analyzer for Custom Planning

Go to Savings Plans > Purchase Analyzer. This tool allows you to:

• Simulate various commitment levels and payment options.
• See estimated savings and utilization for each scenario, helping you compare the different options effectively.

Tip: Combine Recommendations with the Purchase Analyzer to tailor your plan based on your budget and forecasted usage.

Step 4: Choose Your Plan Type and Move Forward with Purchase

• Go to Savings Plans > Purchase Savings Plans.
• Under "Plan Type," pick one of the following options:
• • Compute Savings Plan: Offers the most flexibility, widely recommended for various use cases.
  • EC2 Instance Savings Plan: Provides better discounts, but less flexibility—best for stable workloads.

Step 5: Select Commitment Term and Payment Option

• Choose your preferred commitment term:
• • 1-Year Term: A good middle ground between flexibility and savings.
  • 3-Year Term: Best for long-term, stable usage, offering the highest discount (up to 72%).
• Pick a payment method:
• • All Upfront: Best discount, but requires a larger initial payment.
  • Partial Upfront
  • No Upfront: Monthly billing- ideal for businesses focusing on cash flow management.

Tip: If you’re new to savings plans, start with the 1-year term and the "No Upfront" payment option.

Step 6: Estimate and Set Hourly Commitment

Enter your desired hourly spend commitment (e.g., $25/hour). AWS will suggest a value based on your past usage.

• Use the Purchase Analyzer to assess how well your commitment aligns with your usage and savings expectations.

• Review the estimated savings at this hourly rate.

Note: If unsure, consider starting with a conservative commitment and adjusting later.

Step 7: Add to Cart and Finalize the Purchase

Once your commitment amount is aligned with your goals:

• Click Add to Cart to proceed.
• Review your plan details:
  • Hourly commitment
  • Term (1 or 3 years)
  • Payment type
  • Plan type (Compute or EC2 Instance)
• If everything looks good, click Submit Order to complete your purchase.

Best Practices When Purchasing Savings Plans

• Start small if you’re new to AWS Savings Plans.
• Monitor your plan’s usage and coverage regularly.
• Leverage Consolidated Billing to apply your plan across multiple AWS accounts.
• Review your commitments every 3–6 months based on actual usage trends.

Common Mistakes to Avoid

Conclusion

AWS Savings Plans provide a simple, effective way to lower compute costs for services like EC2, Lambda, and Fargate. By aligning your commitments with actual usage patterns, you can save significantly without compromising on flexibility. To get the most value, be mindful of workload predictability, your budget, and ensure regular monitoring to adjust as needed.