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Amazon EC2 Mastery: Instance Types, Pricing, and Best Practices

Introduction

Amazon Elastic Compute Cloud (EC2) is the backbone of AWS cloud computing, providing resizable compute capacity in the cloud. As an aspiring AWS Solutions Architect, mastering EC2 is crucial for designing scalable, cost-effective, and secure cloud architectures. This comprehensive guide will walk you through everything you need to know about EC2 instance types, pricing models, and best practices.


Understanding EC2 Instance Families

General Purpose Instances

A1 Family (ARM-based)

  • Use Cases: Scale-out workloads, web servers, containerized microservices

  • Key Features: AWS Graviton processors, cost-effective for ARM-compatible workloads

  • Example: A1.medium, A1.large


M5/M5a/M5n/M6i/M6a Family

  • Use Cases: Web servers, enterprise applications, backend servers, gaming servers

  • Key Features: Balanced compute, memory, and networking

  • Example: M5.large (2 vCPU, 8 GiB RAM), M6i.xlarge (4 vCPU, 16 GiB RAM)


T3/T3a/T4g Family (Burstable Performance)

  • Use Cases: Websites, web applications, code repositories, development environments

  • Key Features: Baseline CPU performance with ability to burst, cost-effective

  • CPU Credits: Earn credits when below baseline, consume when bursting

  • Example: T3.micro (2 vCPU, 1 GiB RAM, 20% baseline)


Compute Optimized Instances

C5/C5n/C6i/C6a Family

  • Use Cases: High-performance web servers, scientific computing, batch processing

  • Key Features: High-performance processors, optimized for compute-intensive applications

  • Example: C5.large (2 vCPU, 4 GiB RAM), C6i.2xlarge (8 vCPU, 16 GiB RAM)


C6g/C6gn Family (ARM-based)

  • Use Cases: High-performance computing, web servers, distributed analytics

  • Key Features: AWS Graviton2 processors, up to 40% better price performance


Memory Optimized Instances

R5/R5a/R5n/R6i/R6a Family

  • Use Cases: In-memory databases, distributed web scale cache stores, real-time big data analytics

  • Key Features: High memory-to-vCPU ratio

  • Example: R5.large (2 vCPU, 16 GiB RAM), R6i.xlarge (4 vCPU, 32 GiB RAM)


X1e/X1 Family

  • Use Cases: High-performance databases, distributed analytics, in-memory databases

  • Key Features: Highest memory-to-vCPU ratio in EC2

  • Example: X1e.xlarge (4 vCPU, 122 GiB RAM)


z1d Family

  • Use Cases: Electronic Design Automation (EDA), relational databases

  • Key Features: High frequency processors, NVMe SSD storage


Storage Optimized Instances

I3/I3en Family

  • Use Cases: NoSQL databases, distributed file systems, data warehousing

  • Key Features: NVMe SSD-backed instance storage

  • Example: I3.large (2 vCPU, 15.25 GiB RAM, 475 GB NVMe SSD)


D2/D3/D3en Family

  • Use Cases: Distributed file systems, data warehousing applications

  • Key Features: HDD-backed instance storage, high disk throughput


Accelerated Computing Instances

P3/P4 Family (GPU)

  • Use Cases: Machine learning, high-performance computing, computational fluid dynamics

  • Key Features: NVIDIA Tesla GPUs

  • Example: P3.2xlarge (8 vCPU, 61 GiB RAM, 1 NVIDIA V100 GPU)


G4 Family (GPU)

  • Use Cases: Graphics workstations, video rendering, game streaming

  • Key Features: NVIDIA T4 GPUs, optimized for graphics-intensive applications


EC2 Pricing Models

On-Demand Instances

  • Best For: Unpredictable workloads, development/testing, first-time applications

  • Pricing: Pay per hour/second with no upfront costs

  • Flexibility: Start/stop anytime without penalties

  • Use Case Example: Development environments, proof-of-concepts


Reserved Instances (RIs)

  • Best For: Steady-state workloads with predictable usage

  • Discount: Up to 75% compared to On-Demand

  • Terms: 1 or 3 years

  • Payment Options:

    • No Upfront: Lower discount, pay monthly

    • Partial Upfront: Medium discount, some upfront payment

    • All Upfront: Highest discount, pay everything upfront

RI Types:

  • Standard RIs: Highest discount, limited flexibility

  • Convertible RIs: Lower discount, can change instance attributes


Spot Instances

  • Best For: Fault-tolerant workloads, flexible start/end times

  • Discount: Up to 90% compared to On-Demand

  • Risk: Can be interrupted with 2-minute notice

  • Use Cases: Batch processing, data analysis, CI/CD, web servers with load balancers


Savings Plans

  • Best For: Consistent usage across EC2, Fargate, and Lambda

  • Discount: Up to 72% compared to On-Demand

  • Flexibility: Automatically applies to any usage regardless of instance family, size, or region

  • Types:

    • Compute Savings Plans: Most flexible, applies to EC2, Fargate, Lambda

    • EC2 Instance Savings Plans: EC2-specific, higher discounts


Dedicated Hosts

  • Best For: Compliance requirements, licensing restrictions

  • Features: Physical server dedicated to your use

  • Pricing: Per-host pricing regardless of instance count


Amazon Machine Images (AMIs)

AMI Types

Quick Start AMIs

  • Pre-configured by AWS

  • Include Amazon Linux 2, Ubuntu, Windows Server, Red Hat Enterprise Linux

  • Regularly updated with security patches


AWS Marketplace AMIs

  • Third-party software solutions

  • Pre-configured applications (WordPress, databases, development tools)

  • May include licensing costs


Community AMIs

  • Created and shared by AWS community

  • Use with caution, verify security and reliability


Custom AMIs

  • Created from your configured instances

  • Include your applications, configurations, and data


Creating Custom AMIs

Best Practices:

  1. Clean the Instance: Remove temporary files, logs, and sensitive data

  2. Update Software: Ensure all packages are up-to-date

  3. Configure Startup Scripts: Use user data for dynamic configuration

  4. Test Thoroughly: Launch test instances from your AMI


Steps to Create:

  1. Configure your instance completely

  2. Stop the instance (for EBS-backed AMIs)

  3. Create Image from AWS Console/CLI

  4. Add appropriate tags and description

  5. Set appropriate permissions


Security: Key Pairs and Security Groups

Key Pairs

Purpose: Secure login to EC2 instances using public-key cryptography

Types:

  • RSA: Traditional format, widely supported

  • ED25519: Modern format, better security and performance


Best Practices:

  • Generate separate key pairs for different environments (dev, staging, prod)

  • Store private keys securely

  • Use AWS Systems Manager Session Manager for key-less access

  • Rotate keys regularly

  • Never share private keys


Security Groups

Function: Virtual firewall controlling inbound and outbound traffic

Key Concepts:

  • Stateful: Return traffic automatically allowed

  • Default Deny: All traffic denied unless explicitly allowed

  • Multiple Groups: Instance can have multiple security groups

  • Rule Evaluation: All rules evaluated, most permissive wins


Best Practices:

  • Principle of Least Privilege: Only allow necessary traffic

  • Source Specification: Use specific IP ranges, not 0.0.0.0/0 unless necessary

  • Descriptive Names: Use clear, descriptive security group names

  • Regular Auditing: Review and update rules regularly


Common Configurations:

Web Server Security Group:
- Inbound: HTTP (80) from 0.0.0.0/0
- Inbound: HTTPS (443) from 0.0.0.0/0
- Inbound: SSH (22) from admin IP range

Database Security Group:
- Inbound: MySQL (3306) from web server security group
- No outbound rules needed (stateful)

Instance Metadata and User Data

Instance Metadata

Purpose: Data about your instance available from within the instance

Access Method: HTTP requests to http://169.254.169.254/latest/meta-data/

Common Metadata:


IMDSv2 (Recommended):

# Get token
TOKEN=`curl -X PUT "http://169.254.169.254/latest/api/token" -H "X-aws-ec2-metadata-token-ttl-seconds: 21600"`

# Use token to get metadata
curl -H "X-aws-ec2-metadata-token: $TOKEN" http://169.254.169.254/latest/meta-data/instance-id

User Data

Purpose: Pass data to instance at launch time for initialization

Execution: Runs once at first boot (can be configured to run on every boot)

Common Uses:

  • Install software packages

  • Configure applications

  • Download application code

  • Set up monitoring agents

Example User Data Script:

#!/bin/bash
yum update -y
yum install -y httpd
systemctl start httpd
systemctl enable httpd
echo "<h1>Hello from $(curl -s http://169.254.169.254/latest/meta-data/instance-id)</h1>" > /var/www/html/index.html

Hands-On: Launch Your First EC2 Instance

Step-by-Step Guide

Step 1: Access EC2 Console

  1. Log into AWS Management Console

  2. Navigate to EC2 service

  3. Select your preferred region


Step 2: Launch Instance

  1. Click "Launch Instance"

  2. Choose descriptive name (e.g., "my-first-web-server")


Step 3: Select AMI

  • Choose Amazon Linux 2023 AMI (free tier eligible)

  • Note the AMI ID for future reference


Step 4: Choose Instance Type

  • Select t3.micro (free tier eligible)

  • Review vCPU and memory specifications


Step 5: Configure Key Pair

  • Create new key pair or use existing

  • Download .pem file securely

  • Set appropriate permissions: chmod 400 your-key.pem


Step 6: Network Settings

  • Create new security group or use existing

  • Allow SSH (port 22) from your IP

  • Allow HTTP (port 80) from anywhere (0.0.0.0/0)


Step 7: Configure Storage

  • Default 8 GiB gp3 EBS volume

  • Enable encryption if required


Step 8: Advanced Details (Optional)

  • Add user data script for web server setup

  • Configure IAM role if needed

  • Set monitoring and logging options


Step 9: Review and Launch

  • Review all configurations

  • Launch instance

  • Monitor status in EC2 console


Post-Launch Tasks

Connect to Instance:

# For Linux/Mac
ssh -i "your-key.pem" ec2-user@your-instance-public-ip

# For Windows (using PuTTY)
# Convert .pem to .ppk using PuTTYgen
# Use PuTTY with converted key

Verify Installation:

# Check system information
curl http://169.254.169.254/latest/meta-data/instance-type
curl http://169.254.169.254/latest/meta-data/instance-id

# If web server installed, test
curl localhost

Best Practices for EC2

Cost Optimization

Right-Sizing:

  • Monitor CPU, memory, and network utilization

  • Use CloudWatch metrics to identify over-provisioned instances

  • Resize instances based on actual usage patterns


Instance Scheduling:

  • Stop non-production instances during off-hours

  • Use AWS Instance Scheduler for automated start/stop

  • Consider Spot Instances for non-critical workloads


Reserved Instance Planning:

  • Analyze usage patterns over 2-3 months

  • Purchase RIs for predictable workloads

  • Use RI recommendations in AWS Cost Explorer


Performance Optimization

Instance Placement:

  • Use Placement Groups for high-performance computing

  • Cluster: Low latency, high throughput within single AZ

  • Spread: Distinct hardware, maximum 7 instances per AZ

  • Partition: Spreads across logical partitions


Enhanced Networking:

  • Enable SR-IOV for supported instance types

  • Use Elastic Network Adapter (ENA) for high bandwidth

  • Consider Nitro-based instances for better performance


Storage Optimization:

  • Choose appropriate EBS volume types (gp3, io2, etc.)

  • Use instance store for temporary, high-performance storage

  • Implement EBS optimization for consistent performance


Security Best Practices

Access Management:

  • Use IAM roles instead of hardcoded credentials

  • Implement least privilege access

  • Regular security group audits

  • Enable VPC Flow Logs for network monitoring


Data Protection:

  • Encrypt EBS volumes and snapshots

  • Use AWS KMS for key management

  • Enable CloudTrail for API logging

  • Regular security patching and updates


Network Security:

  • Place instances in private subnets when possible

  • Use NAT Gateways for outbound internet access

  • Implement Network ACLs for additional layer security

  • Use AWS WAF for web application protection


Monitoring and Maintenance

CloudWatch Integration:

  • Enable detailed monitoring for production instances

  • Set up custom metrics for application-specific monitoring

  • Create CloudWatch alarms for proactive alerting

  • Use CloudWatch Logs for centralized log management


Backup and Recovery:

  • Automate EBS snapshot creation using AWS Backup

  • Test restore procedures regularly

  • Implement cross-region replication for disaster recovery

  • Document recovery time objectives (RTO) and recovery point objectives (RPO)


Advanced EC2 Features

Auto Scaling

  • Automatically adjust capacity based on demand

  • Integration with Elastic Load Balancer

  • Health checks and automatic replacement

  • Cost optimization through dynamic scaling


Elastic Load Balancing

  • Distribute traffic across multiple instances

  • Application Load Balancer (Layer 7) vs Network Load Balancer (Layer 4)

  • Health checks and automatic failover

  • SSL/TLS termination


Instance Lifecycle Management

  • Hibernation: Save instance state to EBS

  • Stop vs Terminate: Understand the difference

  • Instance Retirement: AWS-initiated for hardware issues

  • Reboot: Soft restart without losing instance store data


Common Pitfalls and How to Avoid Them

Instance Selection Mistakes

  • Over-provisioning: Choosing instances larger than needed

  • Wrong family: Using compute-optimized for memory-intensive workloads

  • Ignoring network performance: Not considering bandwidth requirements


Security Oversights

  • Open security groups: Allowing 0.0.0.0/0 for SSH access

  • Unencrypted storage: Not encrypting sensitive data

  • Shared key pairs: Using same key pair across environments


Cost Management Errors

  • Forgotten instances: Leaving test instances running

  • Wrong pricing model: Using On-Demand for predictable workloads

  • Unattached resources: Paying for unused EBS volumes and Elastic IPs


Exam Tips for AWS Solutions Architect Associate

Key Points to Remember

Instance Types:

  • Memorize major families: M (general), C (compute), R (memory), I (storage)

  • Understand burstable performance and CPU credits

  • Know when to use each family type


Pricing Models:

  • On-Demand: Pay as you go, no commitment

  • Reserved: 1-3 year commitment, significant savings

  • Spot: Cheapest option, can be interrupted

  • Dedicated: Compliance and licensing requirements


Security:

  • Security groups are stateful, NACLs are stateless

  • Key pairs for initial access, IAM roles for ongoing access

  • Default security group denies all inbound, allows all outbound


Monitoring:

  • Basic monitoring (5-minute intervals) vs detailed (1-minute intervals)

  • CloudWatch metrics available by default

  • Custom metrics for application-specific monitoring


Common Exam Scenarios

Scenario 1: "A company needs to run a web application with variable traffic patterns. What pricing model should they use?"

  • Answer: Combination of On-Demand for baseline capacity and Spot Instances for additional capacity during peak times


Scenario 2: "An application requires high IOPS for database operations. Which instance family is most appropriate?"

  • Answer: Storage Optimized (I3 family) with NVMe SSD-backed instance storage


Scenario 3: "A company wants to migrate from on-premises servers with specific licensing requirements. What EC2 option should they consider?"

  • Answer: Dedicated Hosts to maintain license compliance


Conclusion

Mastering Amazon EC2 is fundamental to becoming an effective AWS Solutions Architect. Understanding instance families, pricing models, and best practices enables you to design cost-effective, performant, and secure cloud architectures. Practice launching different instance types, experiment with pricing models, and always prioritize security in your implementations.

The key to success is hands-on experience combined with theoretical knowledge. Use the AWS Free Tier to experiment with different configurations and pricing models. Remember that as a Solutions Architect, your role is to balance performance, cost, and security requirements while meeting business objectives.


Next Steps

  • Practice launching instances in different configurations

  • Experiment with Auto Scaling and Load Balancing

  • Study VPC networking in detail

  • Explore advanced features like placement groups and enhanced networking

  • Take practice exams to test your knowledge


Quick Reference Commands

# AWS CLI commands for EC2 management
aws ec2 describe-instances
aws ec2 start-instances --instance-ids i-1234567890abcdef0
aws ec2 stop-instances --instance-ids i-1234567890abcdef0
aws ec2 describe-images --owners self amazon
aws ec2 create-security-group --group-name MySecurityGroup --description "My security group"
aws ec2 authorize-security-group-ingress --group-id sg-903004f8 --protocol tcp --port 22 --cidr 203.0.113.0/24

Ready to launch your AWS Solutions Architect journey? Start with hands-on practice and gradually build complexity as you become more comfortable with EC2 fundamentals.

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