Deconstructing Amazon EC2 Spot Instance Pricing

• Published in: 2011 IEEE Third International Conference on Cloud Computing Technology and Science pp. 304 - 311
• Main Authors: Agmon Ben-Yehuda, O., Ben-Yehuda, M., Schuster, A., Tsafrir, D.
• Format: Conference Proceeding
• Language: English
• Published: IEEE 01.11.2011
• Subjects: Algorithm design and analysis; Amazon EC2; Availability; cloud; Heuristic algorithms; History; Linux; Pricing; Shape; spot instance; spot price
• DOI: 10.1109/CloudCom.2011.48
• ISBN: 9781467300902; 146730090X

Cloud providers possessing large quantities of spare capacity must either incentivize clients to purchase it or suffer losses. Amazon is the first cloud provider to address this challenge, by allowing clients to bid on spare capacity and by granting resources to bidders while their bids exceed a periodically changing spot price. Amazon publicizes the spot price but does not disclose how it is determined. By analyzing the spot price histories of Amazon's EC2 cloud, we reverse engineer how prices are set and construct a model that generates prices consistent with existing price traces. We find that prices are usually not market-driven as sometimes previously assumed. Rather, they are typically generated at random from within a tight price interval via a dynamic hidden reserve price. Our model could help clients make informed bids, cloud providers design profitable systems, and researchers design pricing algorithms.