AWS offers bigger discounts for committed customers

Amazon Web Services has launched its latest offensive in an ongoing cloud price war against Google and Microsoft, tweaking its pricing structure to benefit customers willing to pay some or all of their fees upfront.

The company yesterday detailed changes to the pricing structure for reserved instances (RI) on Elastic Compute Cloud (EC2).

Charges for RI infrastructure are now based on how much a customer is prepared to pay upfront. The previous tiered light, medium and heavy usage model has now been replaced by a single category of reserved instance.

AWS had previously offered customers the ability to pay upfront for the full one or three-year term, but is now also offering the option of paying part of the cost at the start of the contract.

Those choosing to pay all of their one or three-year fees upfront will be rewarded with the best hourly price when compared to AWS' On-Demand offering - the company said users would save an average of 63 percent compared to the monthly On-Demand price.

Paying nothing upfront - an option which is only open to those signing up to a one-year term - will result in savings of about 30 percent, AWS said.

The existing usage-based instances will only remain available until February 1 next year.

Google earlier this year announced it would ditch reserved instance pricing for its Compute Engine service, in favour of an automatic discount for those who use an instance for a longer period of time.

A comparison of AWS' new RI pricing with Google's sustained use discounts (based on prices of Linux instances in the US East region) by cloud portfolio management company RightScale found RIs work out cheaper than the rival Google offering when users agree to pay part or all of the costs upfront.

Customers can cut their costs by up to 14 percent by renting a reserved instance for one year and paying for part of the service upfront, RightScale found.

Similarly, RIs are up to 38 percent cheaper than the Google discounts when a user pays all costs upfront and signs up for three years.

The risk the customer takes in signing up for three years is having to forego price cuts to on-demand instances as well as the introduction of more powerful instance types during that period, RightScale said.

But Google is a cheaper option for those who choose not to pay anything up front - RightScale estimated these customers would be ahead by between 11 and 30 percent depending on the virtual machine's configuration. Google similarly does not require a usage committment for its sustained use discounts.

Customers should keep in mind, however, that AWS does offer more memory than Google on high-memory instances and twice the memory as well as an SSD on high-CPU instances, the firm said.

Additionally, AWS also offers volume discounts for RIs, which start from five percent at a $500,000 annual RI spend and reach 10 percent at $4 million.

AWS and its main rivals Google and Microsoft have been engaged in an ongoing price war over cloud infrastructure offerings.

Google last month said it would reduce the price of some of its products by in some cases up to 80 percent, and the month prior slashed the price of its entire range of Compute Engine instance types across all regions by 10 percent.