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Amazon Latest Price Reduction: News for Large Accounts and Linux-Based Users

Amazon announced recently a price reduction on the EC2 instances prices. The price reduction does not include storage or traffic so you may expect that effective cost reduction numbers will be half on your monthly bill.

On Demand Pricing Effects

Minor price reduction for the on demand instances: 5% on small instances, 10% on larger instances. Price Reduction Target: Traditional hosting offers.

Reserved Instances Pricing Effects

Major price reduction on the reserved instances: 20% effective reduction. Price Reduction Target: Traditional hosting offers.

Volume discounts

Finally, Amazon offers volume discounts. The volume discounts are focused on large accounts that spent at least $1M annually at AWS services. The volume discount are focused on the the reserved instances (the equivalent of traditional hosting). You can expect 10% reduction (5% off bill's bottom line) for $250K upfront bill ($1M annual AWS bill) and 20% reduction (10% of bill's bottom line) for $2M upfront bill ($8M annual AWS bill). Price Reduction Target: Traditional hosting offers.

Linux or Windows?

The price reduction increases the price differences between Windows based instances and Linux based. Price Reduction Target: Avoid price wars with Microsoft.

Why Amazon Made These Changes?

The price reduction signals that Amazon has a larger price pressure from Linux cloud providers rather than from Microsoft. It also signals that traditional hosting providers offers focus on large customers and larger servers accounts. These price reductions will help Amazon reduce larger customers migration out of its services.

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