Understanding AWS Savings Plan Recommendations: Payer vs. Linked Account Views

Are you getting the most from your AWS Savings Plans? Savings Plans offer a flexible pricing model that provides you up to 72% savings on your AWS compute workload compared to on-demand prices. When your AWS footprint grows through organic expansion, regional scaling, mergers, acquisitions, or setting up AWS Organizations to align with your business requirements, understanding how the recommendations are made at payer and linked account levels helps you manage Savings Plans at scale.

If you are managing a multi-account AWS Organization, you might have noticed that Savings Plan recommendations differ between your payer account (also known as management account) and linked account (also known as member account). Consider this scenario: you are reviewing Savings Plan recommendations in AWS Cost Explorer. At the payer account level, you see a recommended commitment of $100 per hour for a one-year no-upfront Compute Savings Plans. However, when you switch to the linked account view, the recommendations total only $70 per hour. This blog post explains these differences and shares best practices for making informed decisions on purchasing Savings Plans.

Payer vs Linked Account Recommendations

AWS Cost Explorer provides Savings Plan recommendations from two different perspectives to help you make informed decisions about your Savings Plans commitments.

At the payer account level, the recommendations analyze your total eligible spend across all accounts in your AWS Organization where discount sharing is enabled. This holistic view considers optimization opportunities that aren’t visible when looking at individual linked accounts. For example, your development accounts might have peak usage during daytime weekdays, while your batch processing environments are busiest at night and on weekends. These complementary usage patterns create opportunities for higher Savings Plan utilization through a payer account level commitment. Similarly, if your organization has a regionalized account structure, a linked account serving Asia Pacific traffic using Amazon Elastic Compute Cloud (Amazon EC2) with Auto Scaling can complement another account serving North America traffic in a 24-hour window.

In contrast, linked account recommendations focus only on specific accounts’ usage patterns and eligible spend. This account-specific view often appears more conservative because it calculates existing coverage at each individual linked account and excludes cross-account sharing benefits. A recommendation for a specific linked account will not consider its unused Savings Plans commitments that could benefit other accounts in the organization. For example, linked account recommendations would not recognize periods of low usage in a development account being offset by high usage in a different batch processing account.

How Does AWS Generate Recommendations?

We will explain how AWS generates recommendations, which will help clarify why they differ between payer and linked accounts:

At the payer account level:

• Analyzes all eligible On-Demand usage across all accounts in your organization with discount sharing enabled.
• Combines eligible spending that can be covered by Compute Savings Plans or EC2 Instance Savings Plans.
• Calculates potential savings based on combined eligible spend and maximized savings, leaving some On-Demand spending if necessary.
• Recommends hourly commitment amounts based on the calculation

At the linked account level:

• Analyzes eligible On-Demand usage for each linked account.
• Considers existing Savings Plan benefits already applied to each linked account.
• Calculates potential savings based on individual account-level eligible spend without sharing the savings plan with other accounts within the organization.
• Maximizes savings at the linked account level, leaving some On-Demand spending at each account if necessary.
• Recommends hourly commitment amounts optimized for individual linked accounts and presents the amounts as totals.

AWS calculates Savings Plan recommendations at an hourly granularity because Savings Plans are commitments applied to each hour of usage, rather than daily or monthly usage. This is because your usage can fluctuate significantly on an hourly basis, even if daily views appear relatively stable. This hourly granularity can result in recommended commitment amounts that differ from what you might expect when looking at daily usage in Cost Explorer.

Additionally, AWS only generates recommendations for accounts with an average On-Demand spend of at least $0.10 per hour during the lookback period (7, 30 or 60 days). When your organization has many smaller accounts with low usage, individual linked accounts might not meet the threshold to receive recommendations. However, their combined usage still contributes to calculations at the payer account level.

Frequently Asked Questions in Savings Plans Recommendations

As you compare recommendations across your organization, you’ll likely encounter these common questions:

1. Why does the “current monthly on-demand spend” amount differ between payer account and linked account recommendations? This amount represents only eligible on-demand spend that Savings Plans cover. It’s different from your total on-demand spend in Cost Explorer. At the payer account level, it includes all Savings Plan eligible usage across accounts in your organization and considers discount sharing preferences. At the linked account level, however, the current monthly on-demand spend amount only includes each linked account’s eligible usage after accounting for existing Savings Plan benefits and sums up the spend. In most cases, payer account level recommendations show higher on-demand eligible spend because they capture more variable usage patterns across the organization, allowing for better optimization and coverage by the Savings Plans.
2. Why do some linked account recommendations have higher commitments than the payer account recommendations? Due to how Savings Plans are applied, when you purchase a Savings Plan, it applies to the purchasing account’s usage first before sharing with other accounts (“account affinity”). When each linked account purchases its own Savings Plans, the recommendations optimize for individual accounts rather than all accounts in the organization, often resulting in higher total commitments. For example, imagine a linked account that only has AWS Lambda usage. If that linked account purchases a Compute Savings Plan, the Savings Plan will first apply to the Lambda usage in that account (“account affinity”), since Savings Plans automatically apply to the eligible usage with the highest percentage of savings first. This means the Savings Plan misses out on higher savings that could have been applied to another linked account running m8g Linux Amazon EC2 instances, since the Lambda usage generally has a lower percentage of savings compared to the Amazon EC2 instances. Remember, Savings Plans automatically apply to eligible usage with highest percentage of savings first every hour starting from the owning account (“account affinity”) before sharing with other accounts. You can find specific savings percentages on the Savings Plans pricing page.
3. Why are recommendations missing for some accounts? Recommendations might not appear for certain accounts or time periods if:
   1. The account’s average On-Demand spend is below $0.10 per hour.
   2. The account is already benefiting from existing Savings Plans such as discount sharing from another account within the same organization.
   3. For one-year term, the discount might not be significant enough, while a three-year term might surface recommendations.
   4. Recommendation accuracy depends on your lookback period choice. The engine calculates maximum savings based on historical usage within your selected timeframe. For instance, if a workload started 7 days ago, a 30-day lookback would underestimate the recommendation since it includes 23 days of zero usage.
      These differences explain why the combined linked account recommendations don’t match the payer account level recommendation – they’re answering different questions with different optimization goals.

Choosing Your Savings Plan Management Approach

The two primary approaches that are effective for managing your Savings Plans are centralized and decentralized. In a centralized approach, you purchase Savings Plans based on the payer account recommendations. In a decentralized approach, Savings Plans are purchased based on linked account recommendations.

1. Centralized Management (Recommended)

Many customers find that a centralized approach delivers the greatest cost efficiency. By managing Savings Plans at the payer account level, you achieve better savings compared to a decentralized approach. This approach works best for organizations with centralized financial governance.

How it works:

• Savings Plans apply first to the owning account’s eligible usage (“account affinity”), then to other accounts eligible usage starting by the highest discount.
• Purchase all Savings Plans in the payer account or a designated account with no workloads managed by a centralized FinOps team.
• Prioritize payer account level recommendations over individual linked account recommendations.

Key benefits:

• Maximizing savings by ensuring Savings Plans are applied to the highest-discount usage first.
• Providing flexibility when workloads migrate between linked accounts.
• Simplifying and consolidating Savings Plans management.
• Taking advantage of diverse usage patterns across different accounts (like weekday vs. weekend peaks).
• Allowing engineering and operations teams to focus on their usage choices, without needing to manage Savings Plan purchases directly. The centralized FinOps team can then focus on budgeting, cost allocation, reporting and governance across the organization.

Using a dedicated linked account with no workload for savings plan purchases when discount sharing is activated also provides enhanced security control. This eliminates the need to grant organization management account access to savings plan purchasers. You can restrict their permissions to only the designated account for the sole purpose of making these purchases.

However, the centralized approach might require a cost allocation process based on the company’s accounting requirements. Customers can use AWS Cost Categories, AWS cost allocation tags, and data export to build a chargeback mechanism, while letting the Savings Plans maximize their savings for the entire organization.

2. Decentralized Management

Some customers, particularly those with autonomous business units or organizational structures, or strict departmental budget controls, prefer a decentralized approach. This model allows each business unit to maintain financial independence while still benefiting from Savings Plans.

How it works:

• Each linked account makes their own Savings Plans purchasing decisions for their individual account usage.
• Teams optimize spend based on their individual account recommendations.
• Chargeback happens directly through the account structure.

Key benefits:

• Empowering business units with direct decision making authority.
• Maintaining clear organizational or departmental budget and purchasing accountability.
• Eliminating complex cost allocation processes.
• Aligning cloud spending with business unit financial responsibility.

While most customers use one of the two primary approaches above, some customers implement a hybrid strategy — purchasing most Savings Plans at the payer account level while allowing specific linked accounts to purchase Savings Plans for specialized workloads like Amazon SageMaker AI or high performance computing. Individual account owners make their own Savings Plans purchasing decisions for certain use cases, while FinOps team can maintain centralized coverage across the organization for the common usages.

This hybrid approach requires careful planning, clear governance policies, and cost allocation mechanisms to be effective. When considering this approach, be aware that mixing approaches often creates optimization challenges and can reduce the overall benefits of Savings Plans. AWS provides several services and features to help manage hybrid approaches, including AWS Billing Conductor, custom billing views, and invoice configuration.

Best Practices for Savings Plans Management

Regardless of which approach you choose, consider these best practices:

1. Be consistent in your approach. Mixing centralized and decentralized Savings Plan commitments without a clear strategy creates confusion and reduces potential savings.
2. Consider your workload stability. Frequently shifting workloads between accounts in an organization typically benefits more from a centralized Savings Plan commitment.
3. Understand recommendation calculations. Recommendations are calculated at hourly granularity, even if daily views appear stable. This means they capture usage patterns and recommendations that are not visible in daily summaries but emerge from hourly granularity.
4. Use Savings Plans Purchase Analyzer for custom recommendations. This tool, introduced in November 2024, lets you model and evaluate different Savings Plans purchases scenarios with customizable parameters like commitment amounts and lookback periods to optimize your Savings Plans strategy.
5. Review your discount sharing preferences. Your Savings Plans sharing settings directly impact how recommendations are calculated and applied across your organization.
6. Select appropriate lookback period. Recommendations are based on historical usage, not forecasts. Select a lookback period (7, 30, or 60 days) that closely represents your expected usage. Use shorter periods after recent workload changes and longer periods for stable environments. Consider your weekly or monthly usage patterns in the accounts.
7. Designate an account with minimal workloads. Using a linked account with little to no workloads ensures that the Savings Plans apply to other accounts in your organization, maximizing coverage and savings. Savings Plans are applied first to the owning account’s usage. When that account has no eligible on-demand usage, the Savings Plans are shared more effectively across other linked accounts with eligible usage, optimizing cost savings across the organization, while restricting purchasers’ access to the payer account.
8. Leverage billing tools for managing Savings Plan purchases. AWS provides AWS Billing Conductor, custom billing views, and invoice configuration to help manage complex billing scenarios and cost allocation requirements.

Conclusion

Understanding the nuances between payer and linked account Savings Plan recommendations is crucial for organizations managing AWS at scale. While these different views might initially seem confusing, they serve distinct purposes: payer level recommendations provide a comprehensive view of potential savings across your organization, while linked-account recommendations offer granular insights into specific account usage patterns. Remember that successful Savings Plan management isn’t only about following recommendations in the console blindly — it’s about aligning your purchasing strategy with your organization’s structure, growth patterns, and financial goals. This is particularly important when implementing a rolling purchase strategy, where you make smaller, frequent commitments instead of large annual purchases. Whether you choose to centralize Savings Plan purchases through your payer account or have the individual linked accounts make their own purchasing decisions, the key is to maintain visibility and control over your overall Savings Plan strategy while maximizing your cost savings.

We recommend regularly reviewing your Savings Plan utilization and adjusting your strategy as your organization evolves. With this understanding of recommendation mechanics, you are better equipped to make informed decisions that drive meaningful cost optimizations across your AWS environment.