According to a recent blog post by Corey Quinn on X (Twitter), which can be found here, starting January 15, 2024, AWS will no longer allow the resale of Discounted Reserved Instances. Here’s the official notice:
“Starting from January 15th, 2024, Amazon Web Services (AWS) won’t allow the resale of Reserved Instances (RIs) that were purchased at a discount on the Amazon EC2 Reserved Instance Marketplace. This is because AWS service terms prohibit the resale of discounted RIs under Section 5.5. However, as a goodwill gesture, until January 15, 2024, you can still list discounted RIs for sale on the EC2 RI Marketplace, but only if they were acquired before October 1, 2023.”
This seems like a pretty serious change, but in fact, Section 5.5 has existed in the AWS Terms of Service for a while now; it’s just now being strictly enforced to curb the activities of bad actors in the ecosystem. Some AWS Distributors and Resellers (not including Usage.ai, to be clear) were taking advantage of this situation, profiting off of selling Discounted RIs from an AWS organization with a Volume Discount or Private Pricing, to another organization, enabling the new organization to secure even greater discounts. In doing so, certain distributors with already thin margins found a way to enhance their profits by taking these additional savings as an increased margin for themselves.
So, what constitutes a discounted RI? There are two ways an RI can become discounted:
1: After spending $500k in a region on Reserved Instances (either CRIs or SRIs), you’ll be automatically eligible for a Volume Discount on all future Standard RI purchases. The discount is applied both at the hourly commitment level and at the upfront level, and the discounts begin at 5% and go up as our purchase more. The $500k spend minimum is calculated by the aggregate sum of the List Value of all your Reserved Instances. See the table below for an example:
2: If you have a Private Pricing agreement in place with AWS (these are typically negotiated directly with AWS once you have a very large Reserved Instance spend in a region), then you get a custom-discounted amount on your RIs.
How do I know if I’m impacted by this change?
First, you should check to see if you have any discounted RIs. The best person to ask is your AWS Account Manager for a list of Discounted RIs in your environment that you can sell off now. Even if you are below the $500k spend threshold for a Volume Discount, you may have unintentionally purchased Discount RIs from the Reserved Instance Marketplace. After January 15th ‘24, you will not be able to sell those Discounted RIs. If you are using a FinOps tool like Usage.AI, Zesty, or ProsperOps and have Standard RIs – reach out to your Customer Success representative for their help on guiding the situation. If you are a Usage.AI customer, your customer success team should already be in close contact with you regarding this change in the AWS policy if you are impacted.
I haven’t spent > $500k on RIs yet, so am I safe?
Not quite. The thing is, if you purchased any RIs on the AWS RI Marketplace, you may have unintentionally purchased one or more discounted RIs from 3rd party sellers. If that’s the case, then on January 15 ‘24, you will no longer be able to sell those RIs.
Does this mean Standard Reserved Instances can no longer be used?
As long as you’re below an aggregate list value of $500k in RIs for a region, and as long as you have not purchased any Discounted RIs from the AWS RI Marketplace, you are totally fine and this change does not impact you. If you are above $500k, we suggest maximizing savings and flexibility by combining Convertible RIs with Standard RIs. Convertible RIs can be inflated and deflated, making them ideal for auto-scaling workloads, and you can use Standard RIs for more stable workloads. You can purchase Standard RIs and Convertible RIs directly from AWS, or you can use Usage.AI that does all of the deflation and selling of both CRIs and SRIs for you automatically with Autopilot.
What should I ask my AWS AM once we have identified Discounted RIs?
Your AWS AM is there to work with you! Tell them the situation, that you were not aware of the rules around Discounted RIs, and if you have any discounted RIs, work with your AWS AM to come up with a plan.
Can I reach out to a FinOps provider like Usage.AI for help navigating this?
Yes, should you require help navigating the conversation and future procurement of Reserved Instances and Savings Plans as the rules and policies around these savings instruments evolve, reach out to your Usage.AI Account Manager. If you are not a current Usage.AI customer, you can reach out directly to our SVP of Sales [email protected] or visit our self-service portal at www.usage.ai. Other vendors that might also be able to help include Zesty.co and ProsperOps.com.