AWS pricing is built on a simple promise: pay only for what you use, scale as you grow, and stop paying the moment you stop consuming a resource. There are no long-term contracts required by default, no minimum commitments, and no termination fees — a stark contrast to the upfront capital expenditure model of traditional on-premises IT. Understanding how pricing works across compute, storage, and outbound data transfer is foundational to both real-world cloud cost management and the CLF-C02 exam.Documentation Index
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The three fundamental pricing drivers in AWS are compute (instance type, OS, hours/seconds used), storage (GB stored, storage class, I/O requests), and outbound data transfer (data leaving AWS to the internet). Inbound data transfer to AWS is always free.
EC2 Pricing Options
Amazon EC2 offers six distinct purchasing models so you can match cost to the predictability and fault-tolerance of each workload.On-Demand Instances
On-Demand Instances
Pay by the hour or by the second (with a one-minute minimum) with no upfront payment and no long-term commitment. On-Demand is the most flexible option and carries the highest per-unit cost.Best for: Development and testing, unpredictable or spiky workloads, short-term projects, and new applications where usage patterns are still unknown.
- No capacity reservation required
- Start and stop at any time — no penalties
- Predictable pricing, billed per second (Linux/Ubuntu) or per hour (Windows)
Reserved Instances (RI)
Reserved Instances (RI)
Commit to a specific instance type in a specific region for a 1-year or 3-year term in exchange for a discount of up to 72% versus On-Demand pricing. You can pay all upfront, partially upfront, or with no upfront payment (with the largest discount going to all-upfront 3-year terms).Standard RI: Locked to a specific instance family, size, OS, and tenancy. Highest savings, least flexibility.Convertible RI: Allows you to exchange the instance family, OS, tenancy, or size during the term. Up to ~54% savings — lower than Standard, but future-proof if requirements may change.Best for: Steady-state, predictable workloads running 24/7 (e.g., production web servers, databases).
Savings Plans
Savings Plans
A flexible pricing model where you commit to a consistent amount of compute usage measured in dollars per hour for 1 or 3 years, regardless of instance family, size, OS, or region. Up to 66–72% savings over On-Demand.
- Compute Savings Plans: Apply to EC2, AWS Lambda, and AWS Fargate. Most flexible — covers changes in instance family, region, OS, and tenancy.
- EC2 Instance Savings Plans: Apply only to EC2 within a specific instance family in a chosen region. Highest savings (up to 72%) but less flexible.
Spot Instances
Spot Instances
Purchase unused EC2 capacity at discounts of up to 90% off On-Demand prices. The trade-off: AWS can reclaim Spot capacity with a 2-minute warning, meaning your instance may be interrupted.
- Spot price fluctuates with supply and demand
- Instances are automatically terminated (or stopped/hibernated) when the Spot price exceeds your maximum bid
- Ideal for workloads that can checkpoint and resume
Dedicated Hosts
Dedicated Hosts
A physical EC2 server fully dedicated to your use. You get visibility into and control over the physical host, including the number of sockets and cores.
- Supports Bring Your Own License (BYOL) for software with server-bound licensing terms (e.g., Windows Server, SQL Server, Oracle)
- Can be purchased On-Demand or as a Reservation for additional savings
- Most expensive EC2 option per unit of compute
Dedicated Instances
Dedicated Instances
EC2 instances that run on hardware dedicated to a single AWS account — physically isolated at the host hardware level from instances belonging to other accounts. Unlike Dedicated Hosts, you do not have visibility or control over the underlying physical server.
- Hardware may shift between reboots (within the same account)
- Lower cost than Dedicated Hosts; no BYOL capability
- Available as an On-Demand or Reserved purchase
AWS Free Tier
The AWS Free Tier lets you explore and use AWS services at no cost within defined limits. There are three distinct categories:- Always Free
- 12 Months Free
- Free Trials
These offers do not expire — they are available to all AWS customers indefinitely.
| Service | Free Allowance |
|---|---|
| AWS Lambda | 1 million requests/month + 400,000 GB-seconds compute time |
| Amazon DynamoDB | 25 GB storage + 25 write/read capacity units |
| Amazon SNS | 1 million publishes/month |
| AWS CloudFormation | 1,000 handler operations/month |
| Amazon CloudWatch | 10 custom metrics + 10 alarms |
Service-Specific Pricing Models
Beyond EC2, three core services have their own distinct billing structures that appear frequently on the exam.Amazon S3
- Pay per GB stored (tiered by storage class)
- Pay per API request (PUT, GET, LIST, etc.)
- Pay for data transfer out to the internet (inbound is free)
- Lifecycle policies can auto-move objects to cheaper storage classes (e.g., S3 Glacier) to reduce costs
AWS Lambda
- Pay per number of requests (first 1M/month always free)
- Pay per duration in milliseconds (rounded up to nearest ms), based on memory allocated
- No charge when code is not running — truly serverless billing
Amazon RDS
- Pay for instance hours (instance type, engine, Multi-AZ)
- Pay for provisioned storage (GB/month)
- Pay for I/O requests (for magnetic storage)
- Pay for automated backup storage beyond DB size
- Multi-AZ deployments roughly double instance costs
Pricing Model Comparison
Use this table when a CLF-C02 question asks you to match a workload characteristic to the right EC2 pricing option.| Pricing Model | Commitment | Max Discount | Best Workload Fit |
|---|---|---|---|
| On-Demand | None | — | Unpredictable, short-term, dev/test |
| Reserved Instances | 1 or 3 years | Up to 72% | Steady-state, predictable, 24/7 |
| Savings Plans | 1 or 3 years ($/hr) | Up to 72% | Mixed compute (EC2 + Lambda + Fargate) |
| Spot Instances | None | Up to 90% | Fault-tolerant, interruptible batch jobs |
| Dedicated Hosts | On-Demand or RI | Varies | BYOL licensing compliance |
| Dedicated Instances | On-Demand or RI | Varies | Single-tenant hardware compliance |
AWS Pricing Calculator
Before you deploy any architecture, use the AWS Pricing Calculator at calculator.aws to estimate monthly and annual costs.Select Your Services
Choose each AWS service you plan to use — EC2, S3, RDS, CloudFront, etc. The calculator supports hundreds of services.
Configure Usage Parameters
For each service, enter the instance type, storage volume, request counts, data transfer estimates, and the pricing model (On-Demand, Reserved, Savings Plans).
Compare Pricing Models
The calculator lets you toggle between On-Demand, 1-year RI, and 3-year RI side-by-side so you can quantify potential savings before committing.
The AWS Pricing Calculator is free to use and requires no AWS account. It is updated regularly to reflect current AWS pricing, including regional price differences. Prices vary by AWS Region — us-east-1 (N. Virginia) is typically the lowest-cost region.