How this calculator works
The Reserved Instance Savings Calculator estimates how much you save each year by committing to a reserved instance instead of paying the on-demand rate. It takes three inputs: your on-demand price per hour, the commit discount percentage your provider offers for the reservation, and the number of instances you run. From these it computes the on-demand annual cost (hourly rate multiplied by the roughly 8,760 hours in a year, times your instance count), applies the discount to find the reserved cost, and reports the difference as your projected yearly savings. The two biggest drivers are the discount percentage, which sets the fraction you keep, and the instance count, which scales that saving across your whole fleet.
The key trade-off is commitment versus flexibility. A reserved instance discount only pays off if you actually keep those instances running for the full term; idle or terminated capacity still bills against the commitment, so a high headline discount can erode to little real saving if utilization drops. Before committing, base your instance count on your steady baseline load rather than peak demand, and cover short-lived or unpredictable spikes with on-demand capacity. That way you lock in the discount where usage is certain and avoid paying for reservations you do not fully use.
Frequently asked questions
How much do reserved instances save?
Typically around 40% for a 1-year commitment and up to about 60% for 3 years, versus on-demand. The exact discount depends on the provider, instance family and whether you pay all-upfront, partial or no-upfront.
When should I NOT reserve capacity?
For spiky, unpredictable or short-lived workloads. Reservations lock you into paying for capacity whether you use it or not, so they only pay off on steady baseline load. Cover the predictable floor with reservations and burst on-demand or spot above it.