Adjusting Your AWS Savings Plans Payment Terms For 6+ Figures In Savings

Recently, I was planning out savings plans for 6+ figure savings over the next few years.

These things can be complicated. __“Sure, we can get 52% savings but only on compute, not DBs, not S3, and only if we commit to XYZ, and ABC payment terms”. __

Generally, I try to break it down into raw dollars and cents when communicating with the C suite, particularly the CFO. Their job is complicated enough without needing to understand the nuances of what qualifies for an AWS Compute Savings Plan.

Because of this, I try to give the CFO very distinct variables they can toggle/shift to fit the business's needs.

One important one when it comes to long-term savings plans is the “payment terms”. Mainly deciding when to take our hard-earned cash out of our bank account and hand it to AWS?

There are 3 main payment terms:

• All Upfront
• Partial Upfront
• No Upfront

At the time of this writing, the difference between All Upfront(Roughly 52%) and No Upfront(Roughly 44%) for a 3-year compute savings plan is 8%.

So I ask the CFO, “Would that cash be better utilized on other things over the next 3 years?”

That gives the CFO the option to search all the potential investments the company could put that money in and decide if those investments would have a higher ROI than the 8% additional discount you would get by paying up front.

If having that extra cash on hand now doesn’t have more than an 8% ROI, then you might want to send it off to AWS to get the discount.

If you have something that will yield a 10% or greater return, then you might want to keep that cash on hand for now.

It pays to think like an investor, not just an engineer, when making these decisions.

I am contemplating building my own savings plan calculator for this. Let me know if you would like access to something like that.