Taking these requirements into account, we've created a new EC2 pricing model, which we call Reserved Instances. After you purchase such an instance for a one-time fee, you have the option to launch an EC2 instance of a certain instance type, in a particular availability zone, for a period of either 1 of 3 years. Your launch is guaranteed to succeed; there's no chance of encountering any transient limitations in EC2 capacity. You have no obligation to run the instances full time, so you'll pay even less if you choose to turn them off when you are not using them.

Steady-state usage costs, when computed on an hourly basis over the term of the reservation, are significantly lower than those for the on-demand model. For example, an on-demand EC2 Small instance costs 10 cents per hour. Here's the cost breakdown for a reserved instance (also check out the complete EC2 pricing info):

Term One-time Fee Hourly Usage Effective 24/7 Cost
1 Year $325 $0.030 $0.067
3 Year $500 $0.030 $0.049

Every one of the EC2 instance types is available at a similar savings. We've preserved the flexibility of the on-demand model and have given you a new and more cost-effective way to use EC2. Think of the one-time fee as somewhat akin to acquiring hardware, and the hourly usage as similar to operating costs.