The core trade-off
AWS Savings Plans exchange upfront commitments for discounts of up to 72% versus on-demand pricing. You commit to spending a fixed dollar amount per hour on compute for one or three years. AWS applies that credit automatically to eligible usage.
Four types exist. Compute Savings Plans (up to 66% off) apply across EC2, Fargate, and Lambda, any region or instance family. EC2 Instance Savings Plans (up to 72% off) lock to a specific instance family within one region. SageMaker AI Savings Plans (up to 64% off) cover ML workloads. Database Savings Plans (up to 35% off, launched December 2025) span 11 database services but only offer one-year terms.
The flexibility premium is real. Compute Savings Plans typically deliver 10-40% lower discounts than locked Reserved Instances, but you can change instance types or regions without penalty.
Where they work
Savings Plans make sense for workloads with consistent baseline usage. Core production systems, backend services with stable traffic, internal platforms with predictable demand. Organizations with mature cost monitoring and historical usage data can commit with confidence.
The breakeven period matters more for startups than enterprises. Three-year commitments at 72% off beat one-year plans at 66% off, but only if your architecture stays stable. If you're migrating to containers or serverless mid-term, that commitment becomes dead weight.
Where they don't
Variable workloads break the model. Bursty traffic patterns, seasonal applications, event-driven systems. You pay for committed capacity whether you use it or not. For auto-scaling workloads, Spot Instances often deliver better economics than Savings Plans, despite the interruption risk.
Fast-changing environments struggle too. If you're actively modernizing architecture, moving instance families, or experimenting with new services, commitments create friction. The risk isn't just financial waste, it's operational rigidity when you need flexibility most.
AWS pushed policy changes effective June 2025 that restrict MSPs and resellers from sharing Savings Plans across customer accounts. Worth noting if you're working through a partner.
The pattern
Successful users layer commitments. Start conservative. Cover 60-70% of baseline usage with Compute Savings Plans. Add EC2 Instance Savings Plans for specific stable workloads. Fill gaps with on-demand or Spot. Review quarterly, not annually.
The mistake is treating Savings Plans as set-and-forget. Usage patterns shift. Workloads evolve. Teams that monitor coverage percentage and adjust commitments quarterly see better results than those who commit once and hope.
Notably, AWS now positions Savings Plans as the default over Reserved Instances. The flexibility sounds good in sales calls. The reality is more nuanced. If you have static workloads and want maximum savings, RIs still win. If your infrastructure changes frequently, neither commitment model may be optimal.
The real question: do you know your baseline usage well enough to commit? If the answer is no, work on visibility first, commitments second.