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How It Works
AWS offers two types of EC2 Reserved Instances: Standard and Convertible. When you purchase a Convertible Reserved Instance, you commit to a one-year or three-year term and pay a reduced hourly rate compared to on-demand pricing. In return for accepting a lower upfront discount, you gain the right to exchange the commitment for a different instance family, operating system, tenancy, or size at any point during the term, provided the new configuration is of equal or greater value. AWS applies the exchange by replacing your existing reservation with a new one at current Convertible RI rates. The discount for a Convertible RI reaches up to 54% off on-demand pricing, compared to up to 72% for a Standard Reserved Instance.
Why It Matters for Cloud Cost
Teams whose infrastructure changes frequently face a difficult tradeoff with Standard Reserved Instances. Locking into a specific instance type for one or three years risks stranded capacity if the workload migrates to a different instance family or region. Convertible Reserved Instances reduce that risk by giving engineering and finance teams a mechanism to adjust commitments as the architecture evolves. The cost of that flexibility is a smaller discount, so organizations need to weigh how much instance-type stability they actually expect before choosing between the two RI types. Choosing Convertible RIs without a clear exchange strategy can result in a portfolio that neither maximizes savings nor provides the flexibility originally intended.
Usage AI’s Autopilot mode purchases and adjusts EC2 commitments daily without human approval, continuously optimizing your commitment portfolio to maximize savings.