[JuDue]

And example of what is confusing...

$69 to reserve an instance for a year.

But that is for "light utilization"?!

What does it mean to reserve and instance, but to commit to light usage?

And if you are expecting heavy usage, the price goes up to $195.

But how can you buy an instance for a year but also commit to your usage level? If it's my instance, why is my utilization anyones business?

[dangrossman]

You're not committing to a usage level, you're committing to a pricing level. If you reserve a small instance, you get a small instance, no matter what utilization level you choose. It's the same exact resources no matter what you pick.

The utilization levels are pricing tiers:

Light utilization = lowest upfront cost, highest hourly rate.

Medium utilization = medium upfront cost, medium hourly rate.

Heavy utilization = highest upfront cost, lowest hourly rate.

The names are meant to signify the trade-off you're making. If you run your instance only an hour a day, you will pay the least by choosing "light utilization": the hourly cost is high but you're only going to multiply that by a small number, so the savings in the up-front cost will dominate the total cost. If you run your instance 24 hours a day, then the hourly rate will dominate your total costs, so you'll save money by choosing "heavy utilization" with a higher up-front cost but lower hourly cost.

Segmenting the costs makes the pricing table more difficult to read, but it optimizes for everything else: you pay the lowest possible price for guaranteed resources, and Amazon has better knowledge of how much spare capacity it actually needs to handle the reservations.