You place your mug on your desk and boot your computer. Like every morning, you skim over various dashboards on one screen and sift through your email alerts on the other before you start pulling the regular reports. But this morning turns out to be nothing like other mornings. It is about to take a mean twist that will keep you from ever finishing your morning coffee.

An Amazon Reserved Instance (RI) is one of the most powerful cost savings tools available on AWS. It’s officially described as a billing discount applied to the use of an on-demand instance in your account. To truly understand what RI is, we need to take a step back and look at the different payment options for AWS.

Organizations using Amazon Web Services (AWS) cloud traditionally leveraged Reserved Instances (RI) to realize cost savings by committing to the use of a specific instance type and operating system within the AWS region. Nearly 2 years ago, AWS rolled out a new program called Savings Plans, which give companies a new way to reduce costs by making an advanced commitment of a one-year or three-year fixed term.