Cloudware Vendor Solutions - Guide to Cloud Computing for Business and Technology Managers - page 332

An instance is a virtual server. The user chooses the region and the avail-
ability zone where this virtual server should be placed and selects from a
limited menu of instance types: the one that provides the resources, CPU
cycles, main memory, secondary storage, communication, and I/O band-
width needed by the application. When launched, an instance is provided
with a DNS. This name maps to a private IP address for internal commu-
nication within the internal EC2 communication network and a public IP
address for communication outside the internal Amazon network (e.g., for
communication with the user that launched the instance). Network Address
Translation (NAT) maps external IP addresses to internal ones. The public IP
address is assigned for the lifetime of an instance, and it is returned to the
pool of available public IP addresses when the instance is either stopped or
terminated. An instance can request an elastic IP address rather than a pub-
lic IP address. The elastic IP address is a static public IP address allocated
to an instance from the available pool of the availability zone. An elastic IP
address is not released when the instance is stopped or terminated and must
be released when no longer needed.
16.1.1.10 Charges for Amazon Web Services
Amazon charges a fee for EC2 instances, EBS storage, data transfer, and
several other services. The charges differ from one region to another and
depend on the pricing model (see http://aws.amazon.com/ec2/pricing for
the current pricing structure). EC2 has flexible and multiple price models,
which allow cloud consumers to reduce costs based upon workloads. The
costs are calculated based on factors such as the tenant model, regions, and
computing usage, instance type and operating system of the instances. The
tenant model includes On-Demand, Reserved (Light, Medium, and Heavy
for 1-Year, 3-Year), and Spot.
There are three pricing models for EC2 instances:
1. The On-Demand Instances model allows consumers to pay for
computing capacity by the hour without long-term commitments.
On-demand instances use a flat hourly rate, and the user is charged
for the time an instance is running; no reservation is required for
this most popular model.
2. The Reserved Instances model gives consumers the option to make
a low, one-time payment for each instance they reserve and in turn
receive a significant discount on the hourly charge for that instance.
For reserved instances a user pays a one-time fee to lock in a typi-
cally lower hourly rate. This model is advantageous when a user
anticipates that the application will require a substantial number of
CPU cycles and this amount is known in advance. Additional capac-
ity is available at a larger standard rate.