EC2 Dedicated Host Reservations

TL;DR: A Dedicated Host is a physical server that's entirely yours — you see the sockets and control placement, so you can finally bring your own per-socket/per-core licenses (SQL Server, Windows, Oracle, SAP) instead of paying AWS's license-included markup. The host itself isn't cheap; the avoided license premium is the win. And the reservation is the part that matters — On-Demand Dedicated Hosts are a trap; reserved ones are how the math actually works (30–50% off).

The numbers

• Reservation ladder: On-Demand = 100% of list (a punishing $3–5+/hr per host); 1-year ~60–70%; 3-year all-upfront ~40–50%.
• The lever is the license premium: license-included pricing runs ~2× the BYOL rate — a db.r5.4xlarge SQL Server Enterprise license-included ≈ $5/hr (~$43K/yr) drops to $2–3/hr ($26K/yr) on a Dedicated Host with a license you already own, before the reservation discount.
• Field examples: a fintech moved a dozen SQL Server Enterprise DBs off RDS license-included to 3 reserved Dedicated Hosts (one per AZ) for ~$25K/yr saved using licenses they already owned; an Oracle migration cut 40–50% vs RDS license-included while getting provable core counts for auditors; a healthcare firm used them because physical isolation was a compliance prerequisite, with reservations making the cost manageable.

Do this

1. Confirm you actually own transferable licenses (Software Assurance / license mobility) — BYOL is the whole premise; without it there's no play.
2. Reserve the baseline, absorb peaks elsewhere — size reservations to steady usage; handle seasonal peaks with On-Demand hosts or license-included EC2, never reserve for peak.
3. Choose the term by finance appetite — 3-year all-upfront for max savings on stable multi-year workloads (especially where you're locked into a 3-year Microsoft/Oracle license anyway); 1-year first to validate utilization, then renew.
4. Plan HA deliberately — production means multiple hosts across AZs with redundant licenses; that multiplies cost, so bake it into the math.
5. Track BYOL with AWS License Manager (free) — enforce entitlement rules and produce auditor-ready reports; it pays for itself the first audit.

Gotchas

• You manage placement and capacity — AWS doesn't auto-balance instances across hosts; under-filling a host wastes the sockets you're paying for.
• Host failures hit harder — no transparent live-migration; a failed host takes its instances down with it.
• Reservations are non-refundable — a secondary marketplace exists but with no guaranteed buyer; match the term to real commitment.
• On-Demand hosts are ruinous as steady state — only for short PoCs; the reservation is the point.

Skip this if

• Your stack is open-source or cloud-native with no per-socket licensing — regular EC2 with Savings Plans or Reserved Instances is dramatically cheaper.
• The workload is small (a few instances), highly dynamic / Auto-Scaling-driven, or experimental — the hosting overhead and rigidity outweigh the savings. Pair Dedicated Hosts with AWS License Manager for BYOL compliance tracking.