Savings Plans vs Reserved Instances: Which Should You Buy in 2026?

I get this question constantly: "Should we buy Savings Plans or Reserved Instances?"

The answer used to be complicated. In 2026, it's mostly simple. Here's the framework.

The Short Answer

For EC2 compute: Savings Plans. Almost always. For RDS, ElastiCache, OpenSearch: Reserved Instances. No alternative. For ECS/EKS on Fargate: Savings Plans. For Lambda: Savings Plans (if you have consistent enough usage).

Now let me explain why.

What Are Savings Plans?

Launched in 2019, Savings Plans are AWS's answer to the complexity of Reserved Instances. You commit to a dollar amount of usage per hour, and AWS gives you a discount.

There are three types:

Compute Savings Plans

• Apply to EC2, Fargate, and Lambda
• Work across all regions, instance families, sizes, and OS types
• Up to 66% discount
• Maximum flexibility

EC2 Instance Savings Plans

• Apply to EC2 only
• Locked to a specific instance family and region
• Up to 72% discount (slightly higher than Compute)
• Less flexible, but bigger savings if you're sure about your workload

SageMaker Savings Plans

• Apply to SageMaker ML instances
• Similar mechanics to Compute Savings Plans

What Are Reserved Instances?

RIs are the original AWS commitment mechanism. You commit to a specific instance type in a specific region for 1 or 3 years.

Key characteristics:

• Locked to instance type, region, and OS
• Can be Standard (no changes) or Convertible (can exchange)
• Discounts similar to Savings Plans
• Required for RDS, ElastiCache, OpenSearch, Redshift

Why Savings Plans Usually Win for Compute

1. Flexibility Is Worth More Than You Think

"We'll definitely be running m5.xlarge in us-east-1 for the next three years."

No, you won't. Here's what will happen:

• You'll migrate to Graviton (m7g) for better price-performance
• A new instance type will launch that's 20% cheaper
• Your architecture will change
• A new region will make more sense

Savings Plans adapt to all of this. Reserved Instances don't.

2. Simpler Management

With RIs, you need to track:

• Which instances are covered
• When RIs expire
• Whether to modify or exchange
• Utilization rates per RI

With Savings Plans, you track:

• Are you hitting your commitment? Yes/no.

That's it.

3. The Discount Difference Is Shrinking

The gap between Compute Savings Plans and EC2 Instance Savings Plans is about 6 percentage points. The gap between EC2 Instance Savings Plans and comparable RIs is negligible.

Is 6% worth the operational complexity and risk of RIs? For most organizations, no.

When Reserved Instances Still Make Sense

Databases

There's no Savings Plan for RDS. If you're running production databases on RDS (and you probably should be), Reserved Instances are your only commitment option.

Same goes for:

• ElastiCache
• OpenSearch (fka Elasticsearch Service)
• Redshift
• MemoryDB

Ultra-Stable Workloads

If you have workloads that genuinely won't change — and I mean genuinely — EC2 Instance Savings Plans or RIs can squeeze out a few extra percentage points.

Examples:

• Compliance/audit systems that can't change
• Legacy apps with zero development
• Baseline capacity you'll always need

Marketplace Arbitrage

You can sell unused RIs on the AWS Marketplace. You can't sell Savings Plans.

If you're sophisticated about managing RIs, this can be a way to reduce risk. But most organizations aren't sophisticated about it.

The Hybrid Approach

Most mature FinOps practices use both:

1. Compute Savings Plans for 60-70% of EC2/Fargate usage 2. Reserved Instances for databases and caches 3. On-demand for the remainder (flexibility buffer)

This balances savings with flexibility.

Common Mistakes to Avoid

Over-Commitment

Don't commit to 100% of your current usage. Ever.

Your usage will fluctuate. You'll optimize. Things will change. Aim for 70-80% coverage maximum.

Ignoring Convertible RIs

If you must buy RIs for compute, buy Convertible. The discount is slightly lower, but you can exchange them when (not if) your needs change.

Not Reviewing Regularly

Set a calendar reminder to review your commitments quarterly:

• Are you utilizing what you bought?
• Should you buy more?
• Are any commitments expiring?

Buying 3-Year Terms Without Certainty

3-year terms offer the deepest discounts. They're also the biggest commitment.

Unless you're highly confident in your usage patterns, start with 1-year terms. The flexibility is worth more than the extra few percentage points.

How to Actually Buy

Savings Plans

1. Go to AWS Cost Explorer → Savings Plans → Recommendations 2. Review the recommended commitment amount 3. Adjust based on your growth expectations and risk tolerance 4. Purchase (it's instant)

Reserved Instances

1. Go to the specific service (EC2, RDS, etc.) 2. Navigate to Reserved Instances 3. Review your usage patterns 4. Purchase matching RIs

Pro tip: Use AWS's purchase recommendations as a starting point, but don't blindly follow them. They optimize for coverage, not for your business reality.

The Bottom Line

If you're starting fresh with AWS commitments in 2026:

1. Buy Compute Savings Plans for EC2/Fargate/Lambda 2. Buy Reserved Instances for RDS and caches 3. Keep 20-30% of usage on-demand for flexibility 4. Review quarterly

This approach captures 80-90% of the possible savings with 20% of the complexity.

Don't overthink it.