AWS Savings Plans Optimization

By Illusio Platform Engineering Team · Last reviewed: 2026 · 8 min read

AWS Savings Plans offer substantial discounts (up to 72%) in exchange for committing to a consistent dollar-per-hour compute spend. However, committing prematurely or without proper mathematical modeling creates expensive long-term financial liabilities.

The Two Flavors of Savings Plans

1. Compute Savings Plans

Compute Savings Plans provide the greatest flexibility. They automatically apply to eligible usage across Amazon EC2, AWS Fargate, and AWS Lambda regardless of instance family, size, operating system, tenancy, or AWS region. Discounts reach up to 66%. For teams undergoing active modernization (e.g. migrating EC2 instances to EKS or refactoring x86 to Graviton), Compute Savings Plans are almost always the recommended baseline commitment.

2. EC2 Instance Savings Plans

EC2 Instance Savings Plans offer higher discounts (up to 72%) but require committing to a specific instance family in a specific AWS region (e.g. m6g in us-east-1). They do apply across instance sizes, operating systems, and availability zones within that family. They are best suited to highly stable core infrastructure with predictable long-term architecture.

The Overcommitment Trap

A common mistake is following AWS Cost Explorer’s default Savings Plans recommendations blindly. Cost Explorer looks at trailing usage over the last 30 or 60 days. If your environment contains oversized instances or idle dev clusters that will be downsized next month, committing to that trailing dollar baseline means you will pay for unused commitment capacity for the next 12 to 36 months.

Rule of thumb: Always complete EC2 rightsizing and Kubernetes pod rightsizing before purchasing Savings Plans.

Targeting Coverage vs. Utilization

Two key metrics govern Savings Plans performance:

• Utilization Rate: The percentage of your committed dollar amount that is actively being used by workloads. Your target utilization should be 98%–100%. Any utilization below 95% indicates you are paying for commitment hours that are being wasted.
• Coverage Rate: The percentage of your eligible compute spend that is covered by Savings Plans or Reserved Instances. For high-growth SaaS environments, an optimal target is 70%–85% coverage. Attempting to achieve 100% coverage makes you extremely vulnerable to overcommitment whenever traffic dips or architectures evolve.

Paced Commitment Purchasing

Rather than purchasing a massive 1-year or 3-year commitment on a single day, adopt a laddered purchasing strategy. By purchasing smaller commitments quarterly (e.g. committing to 25% of baseline every 3 months), expiration dates are staggered, risk is diversified, and purchasing decisions naturally adapt to evolving architectural requirements.