Comments on: Amazon EC2 Spot Pricing – Why bother with regular EC2 instances? http://www.naffziger.net/blog/2009/12/14/spot-pricing-for-amazon-ec2-why-bother-with-regular-ec2-instances/ Startups, Search & Seattle Sun, 22 Aug 2010 02:42:41 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Dave Naffziger http://www.naffziger.net/blog/2009/12/14/spot-pricing-for-amazon-ec2-why-bother-with-regular-ec2-instances/comment-page-1/#comment-6098 Dave Naffziger Fri, 05 Feb 2010 07:33:04 +0000 http://www.naffziger.net/blog/?p=653#comment-6098 Great thoughts. The second point has been what has worried me the most.<br /><br />Presuming entirely rational actors with perfect information (and the<br />ability to act on it), the spot price (if it is truly a market price)<br />should never rise above on-demand. But, switching instances is far<br />from frictionless so invariably you have the likelihood of creating<br />the third point (spot is more expensive).<br /><br />I wasn't aware that the spot price had ever risen above on-demand. I<br />find it pretty fascinating though that it has already happened. Great thoughts. The second point has been what has worried me the most.

Presuming entirely rational actors with perfect information (and the
ability to act on it), the spot price (if it is truly a market price)
should never rise above on-demand. But, switching instances is far
from frictionless so invariably you have the likelihood of creating
the third point (spot is more expensive).

I wasn't aware that the spot price had ever risen above on-demand. I
find it pretty fascinating though that it has already happened.

]]> By: Thorsten@RightScale http://www.naffziger.net/blog/2009/12/14/spot-pricing-for-amazon-ec2-why-bother-with-regular-ec2-instances/comment-page-1/#comment-6097 Thorsten@RightScale Fri, 05 Feb 2010 06:35:19 +0000 http://www.naffziger.net/blog/?p=653#comment-6097 There are several problems with your strategy. First you are creating an incentive for Amazon to raise the market price. If everyone bids like you propose they would clearly maximize their revenue by raising the spot price up to the on-demand price. A second problem is that all your instances may get terminated at the same time as the price rises above on-demand. Third the spot price can and has risen above on-demand. Spot pricing is by no means easy to understand and the API is quite a mess. Sigh. There are several problems with your strategy. First you are creating an incentive for Amazon to raise the market price. If everyone bids like you propose they would clearly maximize their revenue by raising the spot price up to the on-demand price. A second problem is that all your instances may get terminated at the same time as the price rises above on-demand. Third the spot price can and has risen above on-demand. Spot pricing is by no means easy to understand and the API is quite a mess. Sigh.

]]>