Suboptimal Use of On-Demand Instances in Fault-Tolerant EC2 Workloads

Matt Weingarten

Service Category

Compute

Cloud Provider

AWS

Service Name

AWS EC2

Inefficiency Type

Suboptimal Pricing Model

Explanation

Many EC2 workloads—such as development environments, test jobs, stateless services, and data processing pipelines—can tolerate interruptions and do not require the reliability of On-Demand pricing. Using On-Demand instances in these scenarios drives up cost without adding value. Spot Instances offer significantly lower pricing and are well-suited to workloads that can handle restarts, retries, or fluctuations in capacity. Without evaluating workload tolerance and adjusting pricing models accordingly, organizations risk consistently overpaying for compute.

Relevant Billing Model

EC2 is billed based on:

Instance Type and Size — determines the base hourly rate
Pricing Model
On-Demand: Highest cost, flexible usage
Spot: Deep discounts with interruption risk
Reservations/Savings Plans: Lower cost for committed usage

On-Demand usage incurs the highest hourly rate. When applied to fault-tolerant workloads, it often leads to avoidable overspending.

Detection

Identify EC2 instances in non-production environments or batch frameworks running on On-Demand
Review Auto Scaling Group and launch template settings for pricing model selection
Cross-check usage patterns against workload type and fault tolerance characteristics
Engage engineering teams to validate whether On-Demand usage is justified

Remediation

Reconfigure eligible workloads to use Spot Instances via launch templates or Auto Scaling policies
Use mixed-instance and capacity-optimized allocation strategies for better availability
Apply On-Demand only where availability, SLA, or licensing requirements demand it
Encourage team-level cost reviews to identify low-risk transitions to Spot

Relevant Documentation