Amend AWS Marketplace agreements to optimize cost

In Andy Jassy’s Letter to Shareholders, he stated, “AWS sales and support teams are spending much of their time helping customers optimize their AWS spend. . . .” The idea of getting more value from your IT infrastructure by reducing costs is just one way to optimize your spend and increase your operational efficiency. Our Amazon Leadership Principles, Customer Obsession and Frugality, led us to include Cost Optimization as one of six pillars in the AWS Well-Architected Framework.

On May 30, 2024, AWS Marketplace made saving money easier for customers using AWS Marketplace Amazon Machine Image (AMI) products with by introducing the ability to amend annual agreements. Agreement amendments provide two features that customers have been asking for:

1. The ability to change Amazon Elastic Compute Cloud (Amazon EC2) instance types for active annual subscriptions purchased from AWS Marketplace.
2. The ability to add annual subscriptions for new instances to an active AWS Marketplace AMI public agreement.

Before you learn how to benefit from the new agreement amendments feature, we will show you what annual subscriptions are and how to access them with AWS Marketplace AMI products. Then we will step through three scenarios to better understand how to deliver the most value from the feature.

Annual subscriptions for AMI products

AWS Marketplace AMI products offer several pricing plans for AMI based products (Figure 1). The annual subscription is a pricing plan that some AWS Marketplace sellers offer for AMI listings. The upfront purchase is for the software and you can run it on an EC2 instance for the entire year. By purchasing an annual subscription, you will receive a discount from AWS Marketplace AMI seller for the software running on the EC2 instance. It is important to remember that an AWS Marketplace AMI has two associated costs, the software cost and the EC2 instance cost, with the annual subscription applying to the software cost.

Figure 1: Filter options to find AWS Marketplace AMI products

Annual subscriptions are purchased in the AWS Management Console from the AWS Marketplace console as a self-service feature (Figure 2). This allows you to buy one or more annual subscriptions for EC2 instances launched using the AWS Marketplace AMI. Your pricing plan will automatically switch from hourly to annual without having to restart the instance or relaunch the application.

Figure 2: Configure your AWS Marketplace subscription annual contract by adding the unit type and quantity

Edit AWS Marketplace annual agreements

The annual agreement amendment is accessed from your AWS Marketplace console. The account accessing your AWS Marketplace console will need to have AWS Identity and Access Management (IAM) policies that allow AWS Marketplace annual agreement amendments. AWSMarketplaceManageSubscriptions is an AWS managed policy that grants permissions to amend AWS Marketplace annual agreements.

Select the new amendment agreement for your AWS Marketplace subscription.

1. Open AWS Marketplace from the AWS Management Console.
2. In the navigation pane, choose Manage subscriptions.
3. Select Manage for the AWS Marketplace subscription that contains the annual agreement you want to amend.
4. Select Edit agreement (Figure 3). The option will be available for active annual agreements.

Figure 3: Amend agreement button available for active annual agreements

Annual agreement amendment scenarios

To better understand how annual agreement amendments will help optimize your AWS Marketplace spend, consider the following three scenarios. The scenarios will reference Product-1 as an AWS Marketplace AMI listing published by AnyCompany. Product-1 and AnyCompany are fictitious, and the prices are for illustrative purposes only.

The following tables contain Product-1 annual subscription pricing (Figure 4) and an active public agreement (Figure 5). Additionally, AnyCompany offers a 50 percent discount for annual pricing when compared to hourly pricing for the Product-1 AWS Marketplace listing.

While you are reading the following scenarios, it is important to remember that changes to the annual agreement amendments must not decrease the cost of the agreement. The changes to the annual agreement cost must be equal to or higher than the active agreement.

Figure 4: Product-1 AMI annual subscription pricing

Figure 5: Product-1 configured annual agreement

Scenario 1: Change instance types with the same AWS Marketplace software price

In this scenario, you are running the instances listed in your configured annual agreement for Product-1 (Figure 5), which are two m5.large and one r5.xlarge Amazon EC2 instances. You decide to resize your instances by changing their instance type from an m5.large instance type to an m7i.xlarge instance type. After resizing the two m5.large instances to m7i.xlarge, you are incurring hourly software charges for Product-1 since the instance type is not included in the annual agreement. Additionally, you have two m5.large annual subscriptions that are unused.

The new agreement amendment feature allows you to optimize the cost of your current annual agreement. To do so, open your AWS Marketplace console and amend the Product-1 annual agreement to remove two m5.large instances and add the two m7i.xlarge instances. The m7i.xlarge annual subscription price is $1,825.00 (Figure 6) and is the same price as the m5.large (Figure 6). Since the Product-1 software cost for the m5.large and the m7i.xlarge are both $1,825.00 (Figure 6), the amendment will not result in an invoice with an additional cost (Figure 6). By amending the Product-1 annual agreement with the m7i.xlarge instances, you will no longer be invoiced Product-1’s AWS Marketplace hourly charge.

Figure 6: Product-1 amended instance type agreement

Scenario 2: Change instance type with an increase in annual agreement cost

In this scenario, you are running the instances listed in your configured annual agreement for Product-1 (Figure 5), which are two m5.large and one r5.xlarge EC2 instances. You decide to resize your instances by changing their instance type from an r5.xlarge instance type to an r7i.4xlarge instance type. Your annual subscription has 100 days remaining before the annual agreement term ends.

Product-1’s annual subscription price for an r7i.4xlarge is $3,650.00, which is more than r5.xlarge’s annual subscription price of $1,825.00 (Figure 4). The new agreement amendment feature allows you to update Product-1’s annual agreement with the r7i.4xlarge based on the increase in the annual agreement cost. The increase in cost is calculated by AWS Marketplace when you are amending the agreement.

Although the cost is calculated by AWS Marketplace, it is important for you to understand how the cost is determined. The difference between the prorated cost for the added r7i.4xlarge instance and the r5.xlarge annual subscription’s unused hours (Figure 7) will be added to the annual agreement cost. In this example, we are using Product-1’s daily cost for our calculation (Figure 4). The invoiced cost of the agreement will be an additional $500.00 with agreement total cost changing from $5,475.00 to $5,975.00 (Figure 7). It is important to note that in our calculation we are using a day as the unit of measurement to calculate the charge as opposed to the amendment feature using an hour as the unit of measurement.

Similar to the previous scenario, until the annual agreement amendment is completed, you will have an unused r5.xlarge annual subscription and accruing hourly software charges for r7i.4xlarge.

Figure 7: Higher priced instance type added to the annual agreement

Scenario 3: Add annual subscription to existing agreement

In this scenario, you are running the instances listed in your configured annual agreement for Product-1 (Figure 5), which are two m5.large and one r5.xlarge. You identify that an m7i.xlarge instance that was launched from the AWS Marketplace Product-1 listing is not included in your agreement. The m7i.xlarge is currently incurring software hourly charges, which are priced at 2x the cost when compared to annual subscription pricing (Figure 4). The new agreement amendment feature allows you to optimize the cost of your current annual agreement by adding the m7i.xlarge instance.

As previously explained, the increase in cost is calculated by AWS Marketplace when you are amending the agreement, but it’s important that you understand the calculation. In this example, we are adding the m7i.xlarge instance to the annual agreement with 100 days remaining until the term ends. We are using Product-1’s m7i.xlarge $5.00 daily cost for our calculation (Figure 4). The invoiced cost of the agreement will be an additional $500.00, with total cost of the agreement changing from $5,475.00 to $5,975.00 (Figure 8). Once you have added the m7i.xlarge to the annual agreement, the instance will no longer incur an hourly software charge.

Figure 8: Added an additional instance to the annual agreement

Conclusion

Annual agreement amendments provide you the flexibility to adjust your AWS Marketplace software purchase to match your Amazon EC2 requirements. The added flexibility allows you to adjust your AWS Marketplace agreement to match your workload compute services and instance type requirements. You no longer have to wait to optimize your workloads until after your AWS Marketplace agreement ends.

Join the AWS Marketplace discussion

In addition to your customer account team and AWS Support channels, AWS provides public Question & Answer forums on our AWS re:Post. Our AWS Marketplace team regularly monitors the AWS Marketplace topic for discussion and questions that could be answered to assist you. If you need help or have a question about planned usage, best practices, or other related areas, consider joining the discussion over at AWS re:Post and adding to the community knowledge base.

About the author

David Rocha is a Senior Partner Solution Architect at Amazon Web Services. He specializes in working with Independent Software Vendors to bring their new to AWS Marketplace. He has over 15 years of architecting and building cloud solutions using open source technologies.