AWS today announced a substantial price drop from March 1, 2012 for many of the Amazon EC2, Amazon RDS, and Amazon ElastiCache instances types around the world. For example, the popular m1.small instance type will see a price drop of 6% for EC2 On-Demand usage and 33% for EC2 Reserved Instance usage. Some of the other instance types have even greater savings: for example, the high memory M2 instances will see a 10% price cut for On Demand and 37% for Reserved instances. Similarly, Amazon RDS will cut its On-Demand prices by up to 10% and Reserved Instance prices by up to 42%. Amazon ElastiCache customers will see their prices drop by up to 10%, depending on their cache node types.

Driving costs down for our customers is part of the DNA of Amazon and therefore also part of the DNA of AWS. Customers are often surprised when our Solution Architects that are working with them have a relentless focus on helping customers to reduce their AWS bill wherever possible. We strongly believe that if we can help our customers reduce their costs, they are likely to be more successful in the long term. The relationship with our customers often becomes more that of a partnership as AWS truly has the customer’s best interest at heart and we are equally interested in their long-term success.

We will continue to drive AWS prices down, even without any competitive pressure to do so. And we will work hard to do this across all the different services, such as the price reduction for Amazon S3 and EBS last moth. I recently ran into a customer who explained that his invoice processing consolidation project was supposed to pay for itself within two years, but because of the continuous AWS price drops they were able to do it in 9 months. I am pretty sure that customer will adjust this estimate favorably again after today’s announcement.

Reducing pricing is not just a matter of passing on the benefits of economies of scale, although that certainly plays a role. We continuously apply all our innovative skills to the design of datacenters, servers, storage, network, etc. to drive new efficiencies and higher reliability. Experiences with the highly scalable, ultra-efficient supply chains of Amazon.com drive great new innovations in the highly redundant supply chains for AWS, which lead to new efficiencies that we can pass on to our customers. Also on the business model side, we continue to innovate, as the introduction of Reserved Instances and Spot Instances have helped customers make significant savings. With the new announcement, we have introduced volume discount tiers for Reserved Instances, which will provide additional discounts of 10% and 20%, both of which are in addition to the price cuts available to all customers, to further help customers drive down costs as they scale on AWS infrastructure.

For more details on the new pricing, visit the EC2 pricing page, RDS pricing page, ElastiCache page, forum announcement, and the AWS developer blog.