LearnGlossary

What is a savings plan (AWS and Azure)?

Updated 25 October 2026 · Published by Zoorik

An AWS Savings Plan is a commitment to spend a set dollar amount per hour on compute, for one or three years. Usage it covers costs less than the on-demand rate. The Azure savings plan for compute works the same way.

An example from AWS

AWS’s example uses made-up rates. Four r5.4xlarge instances run for an hour, each $1.00 on-demand or $0.70 on a Compute Savings Plan.

A $2.00-an-hour plan covers about 2.9 of them. The other 1.1 are billed on-demand, for $1.14.

A $2.00-an-hour plan covers about 2.9 of the 4 instance-hours Illustration with AWS's made-up rates. One bar on a scale from 0 to 4 instance-hours, for 4 r5.4xlarge instances running for one hour. A teal segment from 0 to about 2.9 reads Covered by the $2.00/hour Compute Savings Plan, about 2.9 instance-hours at $0.70 each. A grey segment from about 2.9 to 4 reads Billed on-demand, $1.14, about 1.1 at $1.00 each. A $2.00-an-hour plan covers about 2.9 of the 4 instance-hours Covered by the $2.00/hour Compute Savings Planabout 2.9 instance-hours at $0.70 eachBilled on-demand: $1.14about 1.1 at $1.00 each01234instance-hours: 4 r5.4xlarge instances for one hour
Illustration: AWS’s example with made-up rates, where $2.00 an hour at $0.70 pays for about 2.9 instance-hours and the rest bill at the $1.00 on-demand rate.

Savings plan vs reserved instance

  • An AWS Compute Savings Plan takes up to 66% off on-demand, for any instance family, size or region.
  • An EC2 Instance Savings Plan takes up to 72% off, for one family in one region.

These are AWS’s October 2026 figures, and prices change. Reserved Instances reach the same top discounts, but tie you to instance setups, not a dollar amount. Azure Reservations also need a set family, size and region.

Why it matters for your bill

  • You pay the full commitment every hour, used or not, and can’t change it later.
  • Spare nodes raise what you’d commit to, so reduce cloud costs first.
  • On EKS, a plan covers your EC2 nodes, but not EKS’s own charges.
  • On AKS, it covers the virtual machines behind your nodes, if Microsoft lists their series as eligible.
  • Coral rebalances CPU and memory requests on AKS and EKS to match real use, and drains spare nodes so your autoscaler can remove them.
  • The free assessment works out your own figure.

Read next: How to reduce cloud costs: what moves the bill

Sources: AWS, “Savings Plans types” (opens in a new tab); AWS, “Compute Savings Plans and Reserved Instances” (opens in a new tab); AWS, “Understanding how Savings Plans apply to your usage” (opens in a new tab); Microsoft Azure, “Azure Savings Plans” (opens in a new tab).

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