Amazon EDPs or PPAs : the playbook you need to demystify them
If you are managing a six-figure AWS budget, you have likely already navigated the classic FinOps playbook: rightsizing, Reserved Instances, and Savings Plans. Well managed, these can already unlock savings of 30-40% off AWS list prices.
However, for an additional 5 to 15% in savings, you will need to master the realm of AWS’s Enterprise Discount Programs (EDP) and Private Pricing Agreements (PPA). These negotiated contracts remain opaque and are often misunderstood, leading many companies to leave substantial savings on the table.
In this article, we’ll clear the blur surrounding EDPs and PPAs and offer a structured, data-informed perspective, one you can confidently integrate into your cloud spend management strategy.
A word on jargon
AWS used to distinguish Enterprise Discount Programs (EDPs) ie. broad, cross-service discounts, from Private Pricing Agreements (PPAs), discounts negotiated with specific AWS service teams. Nowadays, AWS labels all negotiated discount agreements as PPAs, regardless of their scope. Throughout the rest of this article, we will use the term EDP / PPA to lift any ambiguity.
Why AWS offers EDP / PPA schemes
EDPs / PPAs are schemes designed to reward organizations with predictable cloud usage. By committing to a specific level of AWS usage over a given period, typically 1 to 5 years, organizations can receive discounted pricing on a wide range of services.
From AWS’s perspective, these commitments offer several strategic benefits.
- Revenue predictability: long-term commitments help AWS forecast more accurately, which is crucial for pacing capex investments and more broadly for financial planning.
- Growth opportunity: EDPs / PPAs typically involve usage growth objectives, incentivizing customers to adopt new AWS services and empowering AWS sales teams to upsell and expand customer accounts.
- Customer retention: discounts drive customer satisfaction and lock-in periods reduce the likelihood of customers churning to competition.
The mechanics and eligibility criteria of EDPs / PPAs
What discounts to expect
EDPs / PPAs offer tiered discounts based on annual committed spending, annual committed spending growth as well as contract duration.
Exact discount rates are not publicly disclosed but industry insights suggest they range from 5% for commitments starting at $500k and can reach 20% for commitments above $50M.
Negociation levers
The discount progression is influenced primarily by three factors:
- The committed usage
- The committed usage growth
- The term length of the agreement
Opting for a shorter-term EDP / PPA, e.g. 3 years at a 10% discount, can sometimes be more advantageous than a longer-term agreement, e.g. 5 years at a 12% discount, especially when considering the flexibility to renegotiate or shift workloads in the future.
For example, in this scenario, the customer negotiated a 15% discount at the end of year 3, bringing them to the same total spend as the 5-year EDP while gaining flexibility and reducing risk!
AWS Marketplace spend eligibility
Commonly, up to 25% of your EDP / PPA commitments can be satisfied by AWS Marketplace spend, so transitioning existing SaaS subscriptions to the marketplace can be a valuable strategy. Major SaaS vendors like Snowflake or Datadog are often supportive of billing through AWS Marketplace as it streamlines their processes, accelerates deal cycles, and unlocks incentives directly from AWS.
What happens in case of a miss?
The discounts associated with EDP / PPA contracts are granted from the day the deal is signed. As a result, companies engaged in EDPs / PPAs are required to pay the full amount committed by the end of the agreement term. If a company’s usage falls short of the commitment, they will be required to pay a so-called “true-up” fee at the end of the period which can in some instances be converted into AWS credits.
Sizing your EDP / PPA
Sizing your EDP / PPA commitment requires a clear view of your historical usage and growth trajectory. Be sure to exclude non-qualifying from your baseline such as AWS credits, a portion of your AWS Marketplace spend (confirm with your AWS Account Manager) and notably, the discounts from the EDP itself. For example, if your current usage forecast is $1M and you plan to receive a 10% EDP discount, your qualifying target should be $0.9M.
While Opsima’s platform core purpose is to maximize savings by intelligently automating Reserved Instance and Savings Plan commitments, we also equip teams with powerful, granular dashboards that surface deep insights into AWS usage patterns. This visibility enables precise, data-driven forecasting making it easier to plan, size, and negotiate EDP / PPA commitments with confidence.
Common EDP / PPA pitfalls
Optimize first, negociate your EDP / PPA next
AWS sets EDP / PPA targets based on net spend, after discounts from Reserved Instances and Savings Plans, not gross on-demand usage. Before forecasting and entering negotiations for an EDP / PPA, it is critical to first right-size the infrastructure and fully leverage RIs and SPs. If your infrastructure is still bloated or under-optimized, you risk locking in an inflated commitment level, only to see actual spending drop post-optimization, eventually missing targets.
Be mindful of growth clauses
EDP / PPA agreements often include aggressive growth clauses, sometimes up to 20% p.a. that require customers to increase AWS usage year after year. While these clauses can lead to better discount rates, they also pose a risk if projected growth does not materialize. Failing to meet these growth commitments can result in financial liability or diminished discount rates. It’s essential to carefully assess your growth projections and ensure they are realistic before committing.
Enterprise Support required
Participation in an EDP / PPA requires enrollment in AWS Enterprise Support for all linked accounts under the payer account. Enterprise Support fees are calculated as a percentage of monthly AWS usage, ranging from 3% to 10%, depending on the usage tier. So it’s essential to factor these costs into your overall return on investment (ROI) calculations. Although subscribing to an Enterprise Support plan can be very valuable, signing an EDP / PPA at $500k annual spend only to realize the Enterprise Support fee wipes out most of the discount might come as an unpleasant surprise.
M&A events
Be aware that EDP / PPA commitments can survive mergers and acquisitions. If your company is acquired, the buyer may be obligated to honor existing commitments, even if the original workloads end up being decommissioned.
Risk mitigation strategies
Engaging third-party providers that offer EDP / PPA commitment insurance can help mitigate the financial risks associated with underutilization. While these services come at a premium, they provide financial predictability which is sometimes preferred by Finance teams.
Surfacing the discounts in Cost Explorer & CUR
AWS provides several tools to help you understand and analyze the discounts applied to your usage. Those are Cost Explorer, and Cost and Usage Report (CUR) now rebranded Data Export. Each offers different levels of granularity and methods for viewing discount information.
Cost Explorer
Cost Explorer is a visual tool that allows you to view and analyze your AWS costs and usage over time. EDP / PPA discounts are not explicitly labeled as such but they are reflected in the difference between regular cost metrics and “net” cost metrics. For instance:
- unblended_cost - net_unblended_cost
- amortized_cost - net_amortized_cost
Cost and Usage Report (CUR) now called Data Export
CUR now called Data Export offers the highest granularity when it comes to digging into AWS costs. Depending on whether “manual discount compatibility” is enabled or not, you might be able to identify EDP / PPA discounts in two ways:
- As specific line items in lump sums associated with lineItem/LineItemType “Discount”
- At the usage line item level by subtracting the net cost metric from the regular cost metric, e.g. lineItem/UnblendedCost - lineItem/NetUnblendedCost
Conclusion
EDP / PPA agreements are valuable tools for cost savings but should be viewed as the final step in a comprehensive cloud cost optimization strategy. Initial efforts should focus on rightsizing, architectural efficiency, and maximizing existing discount instruments like RIs and Savings Plans. Once these elements are optimized, EDP / PPA agreements can provide additional savings, potentially pushing total discounts into the 50–55% range. However, it’s crucial to approach these agreements with careful planning and realistic projections to ensure they deliver the intended financial benefits.
