Re:Lower Pricing for Amazon EC2 Reserved Instances
by DenisM on Thursday August 20, 2009 @11:22AM
(#775224)
> If you bought a reserved instance yesterday, you're in at the old pricing. And that's kind of crappy of Amazon
You're not thinking it through. Suppose the cost of the machine declines over time as a series over 5 months: 9,8,7,6,5. They could charge you those numbers each month, or they could charge you $7 each months on upfront commitment. Either way they recoup the cost and you are paying the same.
However, with monthly plan you have try to predict hardware price declines in your business plan and you bear the consequences of getting it wrong. With commitment plan, you can lock in the expected savings immediately and put it into your business plan. If Amazon gets it wrong they eat the cost, if they get it right they win.
This is a classical risk swap, and it allows you to focus on your business, not tracking the changing environment.
You're not thinking it through. Suppose the cost of the machine declines over time as a series over 5 months: 9,8,7,6,5. They could charge you those numbers each month, or they could charge you $7 each months on upfront commitment. Either way they recoup the cost and you are paying the same.
However, with monthly plan you have try to predict hardware price declines in your business plan and you bear the consequences of getting it wrong. With commitment plan, you can lock in the expected savings immediately and put it into your business plan. If Amazon gets it wrong they eat the cost, if they get it right they win.
This is a classical risk swap, and it allows you to focus on your business, not tracking the changing environment.