An AWS Reserved Instance is a billing discount applied to on-demand usage that matches a set of attributes, not a reserved machine; only the zonal variant also reserves capacity in one availability zone. You pay for the whole one- or three-year term whether matching usage runs or not, so the discount only pays off on usage that stays steady, and the interplay of upfront fee, recurring fee and discounted usage lines decides how Reserved Instances look in the export and in a cost report.
How it works
Four attributes set a Reserved Instance's price and what it applies to: instance type (family and size), region, platform (the operating system) and tenancy (shared or dedicated). A matching on-demand instance in the account gets the discount at once, without a restart. Offering class does not change that: Standard RIs give the larger discount and can be modified but not exchanged; Convertible RIs give a smaller discount but can be exchanged during the term for another Convertible RI with new attributes, including family, platform, scope or tenancy. Terms are one or three years, three at the higher discount. An RI does not renew itself; at expiry the instance keeps running at the on-demand rate.
Three payment options spread the same discount over time. All Upfront pays everything at the start and nothing more. Partial Upfront pays part at the start and the rest as a reduced hourly rate for every hour of the term. No Upfront pays only that reduced hourly rate, for every hour, used or not, and requires a billing history. The more is paid upfront, the larger the discount. A purchase cannot be cancelled.
Scope is regional or zonal, at the same price. A regional RI applies in any availability zone of the region, reserves no capacity, and brings instance size flexibility: the discount applies within the instance family regardless of size, converted through a normalisation factor (small 1, large 4, xlarge 8, 2xlarge 16). An m5.xlarge RI thus covers two m5.large in full or half of an m5.2xlarge, applied from the smallest running instance up. AWS documents that flexibility only for regional Linux/Unix RIs with default tenancy; Windows, RHEL, SUSE, dedicated tenancy, zonal RIs and some instance families (G4ad to G6f, Gr6, hpc7a, P5, Inf1, Inf2, u7i-6tb and u7i-8tb) are excluded. A zonal RI reserves capacity in one availability zone, and the discount applies there only, to the exact family and size.
In an organization with consolidated billing an RI applies first to the purchasing account's usage and then to matching usage in other accounts, if the management account has turned on discount sharing for those accounts. Sharing can be set organization-wide, per account group or per account; the capacity of a zonal RI stays with the owning account.
Reservations exist beyond EC2: Cost Explorer produces recommendations for Amazon RDS, ElastiCache, OpenSearch Service, Redshift, MemoryDB and DynamoDB reserved capacity, each with rules of its own, for instance Single-AZ against Multi-AZ at RDS, or blocks of 100 capacity units at DynamoDB. The principle is the same: a configuration committed to in exchange for a reduced rate.
A Standard RI you no longer need can be sold in the Reserved Instance Marketplace: EC2 Standard RIs only, regional or zonal, with at least one month of term left and at least 30 days in the account and, where there is an upfront payment, after AWS has received it. Convertible RIs and other services' reservations are excluded. The seller sets only the upfront price, AWS keeps twelve percent of it and requires a US bank account.
What it means for your cost
In the Cost and Usage Report an RI produces three line item types, tied together by the reservation ARN. Fee is the one-time upfront payment for All and Partial Upfront, with the full amount as unblended cost in the purchase month. RIFee is the recurring monthly fee, the reduced hourly rate times the hours in the month, charged on the purchase day and then on the first day of each billing period. DiscountedUsage lines are the hours the discount was applied to, at an unblended rate and cost of zero, because the cost already sits in the two fees. The reservation columns add the amortised upfront fee for the period, the unused hours with their fees, and on every discounted usage line the effective cost: the shares of upfront and recurring fee that fall on that hour. Which export to choose is the subject of AWS CUR 2.0 or FOCUS 1.2.
Two views follow. Unblended shows the upfront fee as a spike in the purchase month and the covered instances at zero; that is the invoice. Amortized cost spreads the upfront fee across the term and prices every covered hour at its effective cost; that is the view for cost centres and comparisons. Cost Explorer offers both; in the daily view the unused part of the fees lands on the first of the month.
Cost Explorer reports two measures for reservations. Coverage is the share of instance hours that ran under a reservation, with the on-demand cost of the uncovered hours beside it. Utilisation is the share of purchased RI hours, in normalised units, that matching instances used; net savings are the saving against on-demand minus the cost of unused hours. Both reports take a target, and AWS Budgets can alert when it is missed. Expiry alerts go out 7, 30 or 60 days before the term ends.
Where it goes wrong
- Bought for the peak: the commitment covers the highest hourly load, not the base load; utilisation stays well below one hundred percent while the full
RIFeeis billed. - An attribute does not match: a Linux RI for Windows instances, dedicated instead of shared tenancy, or the wrong region. The RI sits unused, the fee runs, and the instances keep paying on-demand.
- A zonal RI in the wrong availability zone: the discount applies only in the zone bought, with no size flexibility. Once the instances move to another zone the reservation is worthless, even though the region is right.
- Bought in a member account with sharing off: the RI applies only to usage in that account while matching instances elsewhere pay on-demand.
- The upfront fee read as a cost spike: in the unblended view the purchase month looks like an increase and the following months like a saving that is not one. The amortised view corrects it.
- Expiry unnoticed: without renewal the usage quietly returns to the on-demand rate. The expiry alerts in Cost Explorer are not on by default.
Example
On its pricing page for EC2 Reserved Instances (read on 2026-10-15) AWS states a discount of up to 72% against on-demand for Standard RIs and up to 66% for Convertible RIs. Those are maxima; the actual rate depends on instance type, region, platform, term and payment option and is listed per offering.
Sources
Read on 2026-10-15. AWS Reserved Instances for Amazon EC2, how RI discounts are applied and instance size flexibility, Regional and zonal Reserved Instances, Reserved Instance Marketplace, discount sharing for RIs and Savings Plans, reservation line items in the Cost and Usage Report, Reservation columns, RI reports in Cost Explorer, Choosing advanced options, Reservation expiration alerts, reservation recommendations, DynamoDB reserved capacity, EC2 Reserved Instances pricing.