Explanation
Why the waste happens and who it affects.
Using On-Demand instances in these scenarios drives up cost without adding value. Spot Instances offer significantly lower pricing and are well-suited to workloads that can handle restarts, retries, or fluctuations in capacity. Without evaluating workload tolerance and adjusting pricing models accordingly, organizations risk consistently overpaying for compute.
Billing model
The pricing dimensions that drive this cost.
EC2 is billed based on:
- Instance Type and Size - determines the base hourly rate
- Pricing Model
- On-Demand: Highest cost, flexible usage
- Spot: Deep discounts with interruption risk
- Reservations/Savings Plans: Lower cost for committed usage
On-Demand usage incurs the highest hourly rate. When applied to fault-tolerant workloads, it often leads to avoidable overspending.
How to detect
4 checks to find it in your estate.
- Identify EC2 instances in non-production environments or batch frameworks running on On-Demand
- Review Auto Scaling Group and launch template settings for pricing model selection
- Cross-check usage patterns against workload type and fault tolerance characteristics
- Engage engineering teams to validate whether On-Demand usage is justified
How to fix
4 ways to remove the waste.
- Reconfigure eligible workloads to use Spot Instances via launch templates or Auto Scaling policies
- Use mixed-instance groups with the price-capacity-optimized allocation strategy, diversified across many instance types and Availability Zones
- Apply On-Demand only where availability, SLA, or licensing requirements demand it
- Encourage team-level cost reviews to identify low-risk transitions to Spot
Documentation
Vendor references for pricing and configuration.