4.1 AWS Pricing Models

Quick Answer: AWS pricing rests on three drivers — compute (per hour/second/request), storage (per GB-month), and data transfer (outbound per GB; inbound is free). You cut costs with Reserved Instances and Savings Plans (up to 72% off) for steady workloads and Spot Instances (up to 90% off) for interruptible ones. The Free Tier gives new accounts up to $200 in credits on a Free or Paid plan, keeps 30+ services always free within monthly limits, and still covers older accounts under the legacy 12-months-free model.

The AWS Pricing Philosophy

AWS pricing follows three principles tested directly on the exam:

1. Pay-as-you-go — pay only for what you use, when you use it, with no long-term contracts required.
2. Pay less when you reserve — commit to 1- or 3-year usage for substantial discounts.
3. Pay less as AWS grows — economies of scale lower AWS's costs, and those savings are passed to customers through frequent price reductions.

Three Fundamental Pricing Drivers

Data Transfer Rules

On the Exam: Data IN = FREE, Data OUT = CHARGED. This is one of the most repeated billing facts. Private-IP traffic within a single AZ is also free, which is why keeping chatty components in the same AZ saves money.

---

AWS Free Tier

AWS changed the Free Tier on July 15, 2025. Accounts created since then use the current model below; accounts created earlier keep the Legacy Free Tier, which is the model many older study materials describe.

1. Credits on a Free plan or a Paid plan (new accounts)

• New customers get $100 in credits when they sign up and can earn up to $100 more by exploring key services, for up to $200 in total.
• On the Free plan, you can use over 90 services for up to 6 months with no charges. The account closes after 6 months or when the credits run out, whichever comes first, unless you upgrade to the Paid plan.
• The Paid plan gives access to all AWS services at pay-as-you-go rates. New Paid-plan customers are also eligible for up to $200 in credits, and selected services offer short-term trials.

2. Always Free (both plans)

More than 30 services stay free within monthly usage limits, regardless of account age:

3. Legacy Free Tier (accounts created before July 15, 2025)

The older program had three offering types: 12 months free (for example, 750 hours a month of a t2.micro or t3.micro EC2 instance and 5 GB of S3 Standard storage for one year from account activation), always free, and short-term trials. It still applies to accounts created before July 15, 2025.

On the Exam: Lambda and DynamoDB are the classic "Always Free" examples: always-free offers do not expire with account age. Older questions may still describe the legacy "12 months free" type, such as EC2 t2/t3.micro hours, while new accounts now start with credits on a Free or Paid plan.

---

Pricing Models for EC2

Savings Plans vs. Reserved Instances

On the Exam: Both give up to 72%, but Savings Plans are more flexible. If a scenario stresses flexibility across instance families or Regions, choose Savings Plans. Spot wins only when interruptions are tolerable.

---

S3 Pricing Factors

Putting these together, the cheapest design stores rarely accessed data in a Glacier tier, keeps chatty traffic inside one AZ, and uses Savings Plans for any steady compute. The exam rewards spotting which of these levers applies to a given "most cost-effective" scenario.

A final framing that helps on exam day: ask whether the workload is predictable or interruptible. Predictable, always-on workloads justify a 1- or 3-year Savings Plan or Reserved Instance commitment. Interruptible, fault-tolerant workloads belong on Spot. New or unpredictable workloads start on On-Demand until a usage pattern emerges, at which point Cost Explorer's recommendations point to the right commitment. There is no penalty for combining models — a steady baseline on Savings Plans with spiky overflow on On-Demand or Spot is a common, exam-endorsed cost-optimization pattern.