Here and welcome back.
Now, in today's video, we'll be discussing about the basics of EU pricing.
Now do note that the overall established pricing and specifically EU pricing is a very big topic by
itself.
In fact, in one of the organization that I was working with, one of the member from the Devils team,
he used to continuously work on the pricing only.
And this increment was also based on how much cost he could produce for the organization.
And he got a good increment primarily because he reduced the overall cost specifically related to the
two instances.
Now, let's go ahead and discuss the basics about the pricing.
And along with that, we'll also look into how we can go ahead and do a cost optimization, you know,
when new discussing about the payment for these two instances.
There are five primary ways in which we can go ahead and pay for the overall usage.
First one is true on demand.
Second is through savings plan.
You have reserved instances.
You have spot instances.
You also have a dedicated host.
So let's go ahead and discuss each one of them in detail.
Now, the first and a very common one, which a lot of organization makes use of is the on demand pricing.
So with this type of a pricing model, you, Gordon, pay for a compute capacity per hour or per second,
depending upon the instances which has been done.
Now, one, the benefit for On-Demand pricing is there are no upfront payments that are needed and you
can go to an increase or decrease the capacity whenever needed.
So, for example, you create AC2 instance today and maybe tomorrow morning you go intermediated.
So you only pay for that data for which the consumption has been done.
So that is the on demand pricing.
Now, do not that on pricing can also lead to unexpected issues, not only from the cloud service provider
side, but also from the customer side.
Now let's take an example of cloud service provider.
So let's say on Monday, 500 customers were using six of them on demand servers individually.
And on Wednesday, only 30 customers were using 16 GB them on demand servers individually.
So from the cloud service provider side, they will not really have a clear picture on how many servers
they should provision because all the provisioning will cost them high and the provisioning will lead
to a bad user experience.
So this is one of the dilemma that most of the cloud service providers face now.
This also can lead to certain issues from the customer side.
For example, let's say a cloud service provider has under provisionary those resources.
Then many times it has been absorbed.
When you try to create a new instance, you will get this error of launched fee splitting, insufficient
capacity.
So this is one of the common errors that used to be faced by customers a few years back.
But again, nowadays, also, this error occurs, but not as high.
But do note that this is something that needs to be taken care of.
I remember in the organization that I was working with around four or five years back, we used to have
a database instance of which was running in the on site.
So as part of the paging activity, the database instance was stored and it was due to be started within
a minute.
However, as soon as we tried to start immediately, we got an error of insufficient capacity and one
of the production application was down due to that.
However, after five minutes when we started it again, it worked perfectly well.
But this is one of the downsides of on demand that you need to take care of.
Now, the second way in which the pricing would work is based on the reserved instance.
So this instance provides a significant discount, up to 75 percent compared to on demand pricing.
Now, the reason why it is every instance provides such high discount is primarily because of a commitment.
So, for example, let's say you will be running 20 servers of a specific instance, let's say, and
for two weeks light for one year.
So instead of running on demand, which will cost too much more higher, what you say to that, I'll
be running 24 hours of this specific instance type for one year and I'm committed to it.
And it in turn will go ahead and give you a discount, primarily because you have provided a commitment
for one year on this specific instance.
So that is what reserved instance is all about.
So you can for a certain duration, maybe one or three year, and it will give you a discount on the
easy to instance pricing.
So let's quickly take an example.
So let's assume that you have an easy two instance using G4, the longer it takes like best instance.
Now, when you go with the on demand instance model, it will cost you somewhere around two point one
seventy six dollars an hour.
Now, in case, if you're planning to run this instance for the next three years for On-Demand pricing,
it will cost you fifty seven to seventy six dollars.
However, if you can commit that.
You will be using this instance tape, what you can do is you can make use of of the instance and you
can be for three years upfront.
So now what will happen is the overall price from 57, it will be reduced to 21.
So that is a 62 percent savings.
So this is a big benefit.
But the only caveat here is that you have to provide a commitment here in case if you bought is a reserved
instance and if you do not run it.
So let's say the service are stopped, it still you will be charged for that.
So this is one important part to remember at the high level overview.
Now, before we go and look in more detail, let me quickly show you an example.
So I'm into the established pricing calculator, which allows us to quickly, Gordon, estimate things.
So let me go ahead and create an estimate here.
Now we'll be using a series of ecto, let's do a configure and within year one to go ahead and select
the instance.
Let me go ahead and select instanced type here.
So let's say I'll do my daughter slide instanced.
So let's assume that will be done in this instance.
Now, on demand, hourly cost is zero point two to six.
Now, in case if you go back down, you'll see that this is the total monthly cost.
This is for OnDemand.
Now you can go ahead and also select the right pricing strategy.
Now, as we were discussing that, there are various approaches in which the pricing would work.
One is through easy to savings plan.
Then we have a reserve instance, then we have an on demand instance and so on.
So now let's see on how much difference does the reserve instance make.
So if I just quickly do a reserve instance here, you also have to select item maybe one year, three
years.
So if you select the year, that will give you the highest discount.
So let's select three year and payment option, let's say all up front.
That basically means you give the entire money up front.
All right.
And for the next three years, you pay a total upfront of two, two, three, three.
So based on the usage of the two instances, it is very important that you plan things out accordingly.
Now, the third one is the spot instances.
No spot instances basically allow us to bid on a spare computing capacity for up to 90 percent of the
OnDemand cost.
So this will give you the highest discount that is available.
However, it does come with a caveat.
So let's take a use case of a hotel.
So I was recently visiting one of the countries.
And what happened was that when you booked prior maybe let's say you book one month prior, the overall
cost will be much more higher.
However, if you booked just one day back and if they have empty rooms that are available, then they
will negotiate to a much more lower cost.
However, that happens only maybe a day or two back.
No similar goes with this, for instance, is let's say that A.W. has a lot of compute capacity available,
but not a lot of customers are using it.
So instead of just letting it go, what it will tell is that you can go ahead and bid for that unused
compute capacity and they'll give you the highest discount.
However, such instances, I recommend it only for the applications which have a flexible start and
end times.
So that basically means is that these instances are not guaranteed to run.
They can go ahead and be terminated any time.
If there are other customers who have either created on demand instance or their is much, much higher
than yours.
So this is one important part to remember.
But still, what instances are something that are used by a lot of organizations.
So their applications are designed to start flexibile and also to terminate flexibile.
So let's take an example.
So under the easy to consolidate file, quickly go to the spot request Aurier lets request for a spot
instance.
Let's see how much pricing do we get now?
The EMA will just leave it as default.
The primary thing that we are looking into is the instanced type that are available.
So let's take an example.
So you have an instance type of seat reader right now.
The spot price here is zero point zero two nine four.
So this is like 72 percent saving from the on demand.
Similarly, you have ar3 not large, which is providing 80 percent saving when compared to on demand.
So this is great.
So the only thing that you have to make sure is that your application is designed to have a flexible
starting in time because these instances can get terminated.
So you do not really have a guarantee that they'll run.
However, when you discuss about on demand, once on demand instances running, it is guaranteed that
it will continue to run unless and until you stop it and try to start again.
It is of instances if you have a capacity that is and they are guaranteed to run.
So a lot of caveats here, but this is what the spot instances are all about.
The next one is the savings plan.
So savings plans are flexible.
Pricing model that also offers you a lower price when compared to the on demand instance.
Now, what basically is the concept here is that you can meet on a consistent amount of usage, which
is measured in dollars.
So let's say you can make four or five dollars an hour for a one or a three year term.
So if you go out and commit for this amount and are AWG, will go ahead and give you a specific discount
on this.
So this is the basic concept of savings plan.
Now, the last one that we should know is a dedicated horse.
So dedicated horse is a physical Estacada dedicated for your use.
Not do not let when you discuss about upline easy and let's say you are running on the money and so
that instant can share its hardbody with multiple customers.
So they might have one big idea where they have multiple virtual machines that are running.
And that washing machine is basically the Ekta instance.
However, for dedicated horse, it is a physical server dedicated for your use only it is not shared.
The hardware is not shared among other customers.
So again, for the dedicated horse, it can be purchased at the OnDemand level as well as the deserved
instance level.
However, since the entire physical hardware is dedicated for you, the overall pricing will be much
more higher for that of a typical Ekta instance.
So that's the very high level overview about the actual instance pricing.
And this will conclude today's video.