4.1 AWS Pricing Models
Key Takeaways
- AWS uses a pay-as-you-go pricing model — you pay only for the services you consume with no upfront commitments.
- Three fundamental pricing drivers: compute (per hour/second or per request), storage (per GB per month), and data transfer (outbound per GB, inbound is free).
- Data transfer INTO AWS is always free; data transfer OUT of AWS to the internet is charged per GB.
- Reserved Instances and Savings Plans provide up to 72% savings over On-Demand for predictable workloads.
- The AWS Free Tier offers three types: 12-month free (new accounts), always free, and short-term trials for specific services.
AWS Pricing Models
Quick Answer: AWS pricing is based on three drivers: compute (per hour/second/request), storage (per GB/month), and data transfer (outbound per GB — inbound is free). You save with Reserved Instances (up to 72% off), Savings Plans, and Spot Instances (up to 90% off). The Free Tier provides always-free, 12-month free, and trial offerings.
The AWS Pricing Philosophy
AWS pricing is built on three principles:
- Pay-as-you-go — Pay only for what you use, when you use it
- Pay less when you reserve — Commit to usage for 1 or 3 years for discounts
- Pay less as AWS grows — Economies of scale reduce costs, and AWS passes savings to you
Three Fundamental Pricing Drivers
| Driver | How You Are Charged | Examples |
|---|---|---|
| Compute | Per hour, per second, or per request | EC2 instances (per second), Lambda (per request + duration) |
| Storage | Per GB stored per month | S3 (per GB), EBS (per GB provisioned) |
| Data Transfer | Per GB transferred out of AWS | Outbound data to internet, cross-Region transfer |
Data Transfer Rules
| Transfer Type | Cost |
|---|---|
| Data IN to AWS (from internet) | Free |
| Data OUT from AWS (to internet) | Charged per GB |
| Data between AZs (same Region) | Charged (small amount) |
| Data between Regions | Charged per GB |
| Data within the same AZ (using private IP) | Free |
On the Exam: Remember: Data IN = FREE. Data OUT = CHARGED. This is a commonly tested concept. Also, using private IPs within the same AZ is free.
AWS Free Tier
The AWS Free Tier has three types of offerings:
1. Always Free
Services that are always free regardless of when you created your account:
| Service | Free Amount |
|---|---|
| AWS Lambda | 1 million requests/month + 400,000 GB-seconds |
| Amazon DynamoDB | 25 GB storage + 25 WCU + 25 RCU |
| Amazon CloudWatch | 10 custom metrics, 10 alarms |
| Amazon SNS | 1 million publishes |
| Amazon SQS | 1 million requests |
| AWS CloudFormation | Free (you pay for resources created) |
| IAM | Always free |
2. 12-Month Free (New Accounts)
Free for 12 months starting from your AWS sign-up date:
| Service | Free Amount |
|---|---|
| Amazon EC2 | 750 hours/month of t2.micro or t3.micro (Linux and Windows) |
| Amazon S3 | 5 GB standard storage |
| Amazon RDS | 750 hours/month of db.t2.micro or db.t3.micro |
| Amazon CloudFront | 1 TB data transfer out |
| Amazon EBS | 30 GB of SSD (gp2/gp3) storage |
3. Short-Term Trials
Free trials for specific services (varying durations):
| Service | Trial Duration |
|---|---|
| Amazon SageMaker | 2 months free |
| Amazon Inspector | 15-day free trial |
| Amazon Lightsail | 3 months free (select plans) |
| Amazon Redshift | 2-month free trial |
On the Exam: Know the three Free Tier types and their key services. Lambda and DynamoDB are "always free." EC2 t2/t3.micro is "12-month free."
Pricing Models for EC2
| Model | Commitment | Savings | Best For |
|---|---|---|---|
| On-Demand | None | Baseline | Short-term, unpredictable, first-time workloads |
| Savings Plans | $/hour for 1 or 3 years | Up to 72% | Flexible commitment across instance families |
| Reserved Instances | Specific instance type, 1 or 3 years | Up to 72% | Steady-state, predictable workloads |
| Spot Instances | None (can be reclaimed by AWS) | Up to 90% | Fault-tolerant, flexible, batch jobs |
| Dedicated Hosts | On-Demand or Reserved | Varies | Compliance, BYOL licensing |
Savings Plans vs. Reserved Instances
| Feature | Savings Plans | Reserved Instances |
|---|---|---|
| Commitment | $/hour of compute usage | Specific instance attributes |
| Flexibility | Across instance families, sizes, Regions, OS | Locked to specific instance type |
| Types | Compute Savings Plans (most flexible), EC2 Instance Savings Plans | Standard RI, Convertible RI |
| Discounts | Up to 72% | Up to 72% |
On the Exam: Savings Plans are more flexible than Reserved Instances. If a question mentions flexibility in instance family or Region, choose Savings Plans. If it mentions a specific instance type for a known workload, Reserved Instances work too.
S3 Pricing Factors
| Factor | How It Affects Cost |
|---|---|
| Storage Class | Standard > IA > Glacier > Deep Archive (cost decreases) |
| Amount Stored | Per GB per month |
| Requests | PUT, GET, LIST, etc. (per 1,000 requests) |
| Data Transfer | Outbound transfer charged; inbound free |
| Lifecycle Transitions | Moving objects between classes has a transition cost |
| Retrieval | Glacier retrieval varies by speed (Expedited > Standard > Bulk) |
Which of the following data transfer types is FREE on AWS?
A company wants to reduce their EC2 costs by up to 90% for a batch processing workload that can tolerate interruptions. Which pricing model should they use?
Which AWS Free Tier type provides 1 million Lambda requests per month indefinitely, even after your first 12 months?
What is the primary advantage of AWS Savings Plans over Reserved Instances?