Clarification on Savings Plans Purchase Analyzer and Hourly Commitment Calculation

Spend Purchase analyzer recommendation based on the parameters selection for include/exclude existing commitment . Below two scenarios will able to help understand the logic of calculation .

Scenario 1: Including Expiring Savings Plans

Historical Data (Last 30 days):

• EC2 On-Demand Usage: $2,000/month
• RDS On-Demand Usage: $800/month
• Total Eligible Usage: $2,800/month

Current Savings Plans:

• Compute SP #1: $500/month (expires in 2 months)
• EC2 Instance SP #2: $300/month (expires in 6 months)

Total Active: $800/month

Analyzer Result WITH Expiring Plans Included:

Recommended New Commitment: $2,200/month

Breakdown:

• Replace expiring SP #1: $500/month
• Replace expiring SP #2: $300/month
• Cover remaining usage: $1,400/month ($2,800 - $800 current + $800 expiring)

Scenario 2: Excluding Expiring Savings Plans

Same Historical Data:

• Total Eligible Usage: $2,800/month
• Current Active (non-expiring): $0/month

Analyzer Result WITHOUT Expiring Plans:

Recommended New Commitment: $2,800/month (Covers all historical On-Demand usage)

When working with AWS Savings Plans Purchase Analyzer for renewals, understanding how the recommendations are calculated is important for making optimal commitments.

1. When you include active but expiring Savings Plans in your analysis, the analyzer doesn't calculate an incremental commitment beyond your current plans. Instead, it bases recommendations on your historical usage during the selected lookback period (7, 30, or 60 days). The analyzer doesn't automatically subtract your existing commitments from historical usage - it analyzes the usage pattern as is and recommends a commitment that would maximize savings based on that pattern.

2. If you exclude expiring Savings Plans, the analyzer will indeed treat it as if you have no active commitments and recommend the full hourly commitment needed to cover your historical usage across all eligible services in your account. This approach helps you determine what your commitment should be once your current plans expire.

3. The analyzer might show negative estimated savings in some scenarios if the commitment amount you're considering is higher than what AWS recommends based on your usage patterns. AWS recently introduced an alert feature that warns you when trying to add a Savings Plan with a commitment amount higher than the recommended value. Overcommitting can lead to unused hours that don't roll over, resulting in less optimal savings.

For right-sizing your new Savings Plan commitment, it's crucial to:

• Select a lookback period that accurately reflects your expected future usage
• Consider hourly usage patterns since Savings Plans require an hourly commitment and workload usage might fluctuate throughout the day
• Review your existing AWS commitments and agreements, especially if you have Enterprise Support or a Private Pricing Agreement
• Factor in any EC2 Reserved Instances that might be expiring during your new Savings Plan term

Remember that the analyses don't forecast your usage - they're based strictly on historical data from your selected lookback period. For management accounts, analyses consider usage across all accounts in your organization that have Savings Plans discount sharing enabled.
Sources
Optimizing your costs with Savings Plans recommendations and alerts | AWS re:Post
Community | Calculating hourly commitment when replacing a savings plan
Understanding your analysis calculations - Savings Plans