AWS EC2 Cost for a Microservice Application: Pricing, Estimates, and Saving Tips

Deploying a microservice application on AWS EC2 introduces variable costs that can quickly add up if not carefully managed. Factors like instance types, data transfer, and scaling impact overall expenses, making it essential to understand pricing structures and estimate costs accurately. 

This guide explores EC2 pricing for microservices, offers cost estimation insights, and shares strategies to optimize spending without compromising performance.

Breaking Down AWS EC2 Pricing

Amazon EC2 (Elastic Compute Cloud) provides scalable virtual servers, allowing microservice applications to run efficiently. Pricing is based on multiple factors, including instance type, region, and usage patterns. Each instance has a specific cost based on its computing power, memory, and networking capabilities. In addition to instance pricing, AWS charges for data transfer, storage, and additional services like Elastic Load Balancing (ELB) and Auto Scaling. Understanding these cost components is important for estimating and managing expenses effectively.

AWS offers several pricing models to accommodate different workloads and budgets:

• On-Demand Instances – Pay for compute capacity by the hour or second with no upfront commitment.
• Reserved Instances – Commit to a one- or three-year term for significant savings compared to On-Demand pricing.
• Spot Instances – Use spare AWS capacity at heavily discounted rates, though instances can be interrupted.
• Savings Plans – Flexible pricing model offering discounts based on a committed usage level over a set period.
• Dedicated Hosts – Physical servers reserved for exclusive use, often needed for compliance or licensing requirements.

Choosing the right pricing model depends on workload predictability, budget constraints, and the need for flexibility. A well-optimized AWS cost strategy can significantly reduce EC2 costs while maintaining performance for microservice applications.

EC2 Instance Types

To start estimating EC2 costs, you need to get familiar with the predefined instance types, so you can identify the best one for you. They are grouped into families that emphasize some possibilities for your workloads: 

• General Purpose - also known as balanced instances, best for web servers, microservices, small and medium databases, development environments and code repositories.
• Compute Optimized - designed for compute-intensive workloads, like batch processing, data analytics, scientific modeling, dedicated gaming servers, machine learning, and high-performance computing.
• Memory Optimized - memory-intensive applications that process large data sets in memory, such as databases and real-time streaming.
• Accelerated Computing - used for graphics processing, machine learning, data pattern matching and other numerically intensive workloads. 
• Storage Optimized - designed for high, sequential read and write access to very large data sets on local storage. Best for NoSQL databases, in-memory databases, data warehousing, Elasticsearch, analytics workloads.

For a typical, simple microservice application, a minimum configuration of t2.medium instance type should do the work. T2 instances are the lowest-cost general purpose instance type. You can easily change your instance types if after a while your needs change. 

Estimating EC2 Compute Costs in the Pricing Calculator

AWS provides the Pricing Calculator as a tool to estimate EC2 prices based on specific usage requirements. This EC2 cost calculator helps users plan their cloud spending by allowing them to customize configurations, compare pricing models, and understand how different factors impact overall costs. Whether you're running a single EC2 instance or a complex microservice architecture, the calculator provides a clearer picture of expected expenses before deployment.

Key features of the AWS Pricing Calculator for EC2 include:

• Instance Selection – Choose from various EC2 instance types based on CPU, memory, and networking needs.
• Pricing Model Comparison – Evaluate costs for On-Demand, Reserved Instances, Spot Instances, and Savings Plans.
• Usage-Based Estimates – Input expected usage hours, storage needs, and data transfer to generate an accurate cost breakdown.
• Additional Services – Factor in costs for Elastic Load Balancing (ELB), Auto Scaling, and EBS storage.
• Region-Based Pricing – Compare EC2 prices across AWS regions to find the most cost-effective location.

By leveraging the AWS Pricing Calculator, businesses can make informed decisions about instance selection and pricing models, making sure they optimize costs while maintaining performance for their microservice applications.

Step-by-Step Guide to Estimating Costs

Accurately estimating EC2 costs requires selecting the right instance type, configuring compute settings, and factoring in storage and networking expenses. The AWS Pricing Calculator simplifies this process by providing a structured way to input these details and generate cost estimates. Below is a step-by-step breakdown of the key components involved in estimating costs for a microservice application.

Selecting EC2 Instances

The first step in estimating costs is choosing the appropriate EC2 instance type. AWS offers a range of instance families, each optimized for different workloads:

• General Purpose (e.g., t3, m5) – Balanced CPU, memory, and networking for most applications.
• Compute Optimized (e.g., c5, c6g) – Higher CPU performance for compute-intensive tasks.
• Memory Optimized (e.g., r5, x2idn) – Designed for applications requiring high memory capacity.
• Storage Optimized (e.g., i3, d2) – Ideal for workloads with high disk throughput and storage needs.

Selecting the right instance family ensures cost efficiency by aligning resources with workload requirements, preventing over-provisioning and unnecessary spending.

Configuring Compute Options

Once the instance family is selected, the next step is configuring specific compute options:

• Instance Type – Choose based on the number of vCPUs, memory, and network performance needed.
• Region – EC2 pricing varies by AWS region, so selecting a cost-effective location can reduce expenses.
• Usage Model – Decide between On-Demand, Reserved Instances, Spot Instances, or Savings Plans based on workload predictability.
• Auto Scaling Considerations – If using Auto Scaling, estimate the average number of instances running at peak and off-peak hours.

Each of these factors influences overall EC2 costs, making it important to adjust settings based on budget and performance needs.

Storage and Networking Options

Storage and networking contribute significantly to EC2 costs. When estimating expenses, consider the following:

• Elastic Block Store (EBS) – EC2 instances typically use EBS for persistent storage. Costs depend on volume type (e.g., General Purpose SSD, Provisioned IOPS SSD) and allocated storage size.
• Data Transfer Costs – AWS charges for data transfer between regions and to the internet. Keeping traffic within the same AWS region minimizes costs.
• Elastic Load Balancing (ELB) – If distributing traffic across multiple instances, ELB incurs additional charges based on the number of processed requests and data transfer.

Factoring in storage and networking expenses ensures a more accurate cost estimate, preventing unexpected charges when running a microservice application on AWS EC2.

Comparing Pricing Models

AWS offers multiple pricing models for EC2 instances, each affecting costs differently based on usage patterns and commitments. Choosing the right approach depends on how predictable your workloads are and how much flexibility you need. Below is a cost comparison for an EC2 instance running 730 hours per month:

• On-Demand – $67.74/month
  
  • Savings Plans: 1-year: $48.33/month; 3-year: $33.73/month

• Standard Reserved Instances
  
  • 1-year: $41.90/month
  • 3-year: $29.20/month

• Convertible Reserved Instances 
  
  • 1-year: $48.33/month
  • 3-year: $33.73/month

• Spot Instances – $21.02/month (up to 70% savings over On-Demand)

Spot Instances provide the lowest cost but come with the risk of interruptions, making them ideal for batch jobs or applications that can handle disruptions. Reserved Instances and Savings Plans require a long-term commitment but significantly lower costs. On-demand instances, while the most expensive, offer flexibility without upfront commitments, making them a practical choice for new applications.

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EBS Storage

You can attach block storage volumes to each EC2 instance using Amazon Elastic Block Store (EBS), which is built for high-throughput and transaction-heavy workloads. It supports use cases such as relational and non-relational databases, containerized applications, and file storage.

EBS offers six volume types, each varying in performance, size, and cost. For a simple microservices application, General Purpose SSD (gp2) with the default 30 GB storage is a practical choice:

• 30 GB x $0.10 x 2 instances = $6.00 (EBS Storage Cost)
• AWS Free Tier includes 30 GB of storage, 2 million I/Os, and 1 GB of snapshot storage.

This kind of waste can be really easy to produce, especially if you have been working with AWS for a long time and launched many instances without checking the delete box. Be sure to consider this into your AWS cost savings strategy. 

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Tips to Cut AWS EC2 Price Down

Managing EC2 costs effectively requires a mix of strategic choices and regular optimization. Here are some ways to reduce your AWS bill without sacrificing performance:

1. Use Reserved Instances or Savings Plans

If you have predictable workloads, Reserved Instances (RIs) or Savings Plans can lower costs by up to 72% compared to On-Demand pricing. Choose a 1-year or 3-year commitment based on your application's stability.

2. Take Advantage of Spot Instances

For workloads that can handle interruptions, Spot Instances offer discounts of up to 90% compared to On-Demand prices. These work best for batch processing, background jobs, and fault-tolerant applications.

3. Right-Size Your Instances

Regularly review your EC2 usage and downgrade over-provisioned instances. AWS offers tools like Compute Optimizer to suggest better instance sizes based on historical performance data.

4. Schedule Instance Shutdowns

Running instances 24/7 can be costly, especially in non-production environments. Use AWS Instance Scheduler to automatically stop and start instances based on business hours, reducing unnecessary expenses.

‍5. Optimize EBS Storage Usage

Unused EBS volumes can silently increase costs. Delete unattached volumes and snapshots that are no longer needed. AWS Cost Explorer can help identify underutilized resources.

‍6. Leverage Auto Scaling

Instead of running large instances at all times, use Auto Scaling Groups to adjust compute power dynamically based on demand. This ensures you only pay for what you need during peak and off-peak periods.

‍7. Use AWS Free Tier and Credits

AWS provides 750 hours of free EC2 usage for new accounts. If eligible, apply for AWS Activate or promotional credits to offset initial infrastructure costs.

Regular cost monitoring and resource adjustments can lead to significant savings over time. By implementing these strategies, you can keep your EC2 expenses under control while maintaining application performance.

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Conclusion

Estimating and monitoring your EC2 costs is crucial for effective cloud management. Use the AWS Pricing Calculator to estimate costs based on your workload, and consider cost allocation tags to track expenses. Regularly review usage to avoid overprovisioning, shut down unused instances, and identify opportunities for savings with Reserved Instances.

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Frequently Asked Questions

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Is EC2 free?  

EC2 is not free, but AWS offers a Free Tier for new users. This includes 750 hours of t2.micro or t3.micro instances each month for the first 12 months. After the Free Tier period ends, you’ll be charged based on the instance type, region, and usage.

Is EC2 to S3 free?  

No, transferring data from EC2 to S3 is not free. While inbound data to EC2 is free, transferring data from EC2 to S3 incurs charges based on the amount of data and the region. Be sure to check AWS pricing for the exact rates.

Does EC2 cost money when stopped? 

When an EC2 instance is stopped, you don’t pay for compute resources, but you’ll still incur charges for storage like EBS volumes. If you don’t need the instance, make sure to terminate it completely to avoid storage costs.