Question about timing of Reserved Instances' savings in our monthly bill

Question

Hi re:Post,

We understand we can purchase up to (40) reserved instances at one time to covert our (35) on-demand instances to RI.

We read that, *"The discounted rate for Amazon RDS Reserved Instances (RIs) automatically applies to usage starting with the billing period after you purchase them."*

So we have a monthly billing period, for example, our September billing period was from Sept 1 to Sept 30.   We are currently half way through our Oct billing period.

If we converted all (35) RDS PostgreSQL RDS on-demand to Reserved Instances tomorrow (Oct 15th) and based on the statement above, ie "The discounted rate for Amazon RDS Reserved Instances (RIs) automatically applies to usage starting with the billing period after you purchase them."

We should expect to see the RI instances saving start on Nov 1, ie our next billing period.

Q1) Is this correct ?

-------
Q2) Before we switch to RI, we see that we have recommendation from AWS regarding all our instances:

"Your database will be charged for RDS Extended Support starting March 1"

"Upgrade your major version to avoid additional charges due to RDS Extended Support"

So it seems we should upgrade before enabling Reserved Instance conversion because we see some wording in the documentation that says we can't upgrade after RI conversion:

```
"Can I modify my Reserved Instance terms after purchasing?
No, modifications of RI terms cannot be made in RDS for PostgreSQL after purchasing. You cannot change Region, DB engine, DB edition, DB instance class, deployment type, or term length after you purchase your RIs" 
```
**Q2) So we should should upgrade first then convert to Reserved Instances, correct?**

Thank you for your time and help!

Best Regards,

Donald

re:Post Agent · Accepted Answer

Let me address your questions one by one:

Q1) Your understanding is correct. If you purchase Reserved Instances (RIs) for your RDS PostgreSQL instances on October 15th, the discounted rate will start applying from the beginning of your next billing period, which in this case would be November 1st. The savings from RIs do not apply immediately upon purchase but rather from the start of the next billing cycle.

Q2) You are absolutely right to be cautious about this. It's crucial to upgrade your database instances before converting to Reserved Instances. Here's why:

1. The warning about RDS Extended Support indicates that your current PostgreSQL version will soon be out of standard support. This could lead to additional charges and potential security risks.

2. As you correctly pointed out, once you purchase RIs, you cannot modify certain attributes, including the DB engine version. This limitation is indeed mentioned in the AWS documentation.

3. By upgrading first, you ensure that your databases are on a supported version, avoiding extra charges and maintaining better security posture.

4. After upgrading, you can then convert to Reserved Instances with the confidence that you won't need to change the major version during the RI term.

So, the recommended order of operations is:

1. Upgrade your RDS PostgreSQL instances to a supported major version.
2. Once the upgrade is complete and you've verified everything is working correctly, then purchase the Reserved Instances.

This approach will help you avoid being locked into an outdated version and incurring additional charges for extended support. It also ensures that you can take full advantage of the RI savings without worrying about version compatibility issues in the near future.

Remember to thoroughly test your applications after the upgrade to ensure everything functions correctly with the new PostgreSQL version before committing to the RI purchase.
  
**Sources**  
[Reserved Instances](https://aws.amazon.com/aws-cost-management/aws-cost-optimization/reserved-instances/)  
[Reserved Instances billing - Amazon EC2 Reserved Instances and Other AWS Reservation Models](https://docs.aws.amazon.com/whitepapers/latest/cost-optimization-reservation-models/reserved-instances-billing.html)  
[Optimizing Reserved Instance Purchases for RDS when Instance Scheduling is in use | AWS re:Post](https://repost.aws/articles/ARd-aVHZYdQS25eN9GBlTypw/optimizing-reserved-instance-purchases-for-rds-when-instance-scheduling-is-in-use)

Question about timing of Reserved Instances' savings in our monthly bill

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