Red Hat Enterprise Linux - New Price Model (FAQ)

IONOS as a leading public cloud service provider recognizes the crucial role of adaptability and security in today's ever-evolving market. Red Hat Enterprise Linux (RHEL) stands out for its robust security features and unwavering reliability, making it ideal for hybrid and multi-cloud environments. With RHEL, seamless workload migration, simplified management, and enhanced visibility pave the way for smooth transitions from development to production across public, private, and hybrid cloud landscapes. This combination of flexibility and reliability empowers our customers to uphold existing skills, standards, and best practices while efficiently deploying applications for your customers both in the cloud and on-premises.

The existing pricing model for RHEL in public cloud settings was initially established in 2011. Since then, cloud adoption has accelerated, and the pricing structure, based on the size of the cloud instance, has remained unchanged. To accommodate the evolution of cloud services and their varying instance sizes, Red Hat has embarked on a modernization journey, transitioning from the dated two-tiered pricing system ("small" and "large") to a more flexible and modular approach.

In response to the expanding array of flexible instance sizes offered by cloud providers, the new RHEL pricing model now scales based on vCPU or Core count, aligning with the prevalent pricing model for cloud Virtual Machines (VMs) and software. This strategic shift aims to better address the diverse requirements of partners and customers operating in the public cloud arena. At the core of this transformation is a commitment to enhancing the user experience and optimizing pricing structures in line with industry trends and customer needs.

Note: IONOS will transition to the new RHEL subscription model by August 1, 2024.

This documentation guides you through the changes and ensures a seamless transition. Subsequent topics will delve deeper into the specifics of the subscription model alterations.

What are the details of the subscription model change?

The previous pricing structure featured a two-tiered system that categorized VMs as either "small" or "large" based on the number of cores, or vCPUs, with fixed prices assigned to each category regardless of the VM's actual size. The duration of VM allocation determined subscription fees, as the number of cores or vCPUs did not influence the pricing, resulting in a capped cost for RHEL subscriptions.

OLD RHEL SUBSCRIPTION MODEL CATEGORIES
1h Red Hat Enterprise Linux Server Small Virtual Node (1-4 vCPUs or Cores)
1h Red Hat Enterprise Linux Server Large Virtual Node (5 or more vCPUs or Cores)

In the new subscription model, while retaining a similar approach, VM size becomes a key factor in determining subscription costs, making the pricing model more modular. Unlike before, the cost of a subscription will no longer be capped. The revamped model introduces a three-tier pricing system that classifies VMs as "small," "medium," or "large," based on the number of cores, or vCPUs. Each category is associated with a price per vCPU or core rather than per VM. This results in a calculation that multiplies the price by the size category and the number of vCPUs or cores, and the duration of VM allocation.

NEW RHEL SUBSCRIPTION MODEL
1h Red Hat Enterprise Linux Server Small Virtual Node (1-8 vCPUs or Cores)
1h Red Hat Enterprise Linux Server Medium Virtual Node (9 - 128 vCPUs or Cores)
1h Red Hat Enterprise Linux Server Large Virtual Node (129 or more vCPUs or Cores)

How are the new RHEL subscription fees calculated?

As previously mentioned, Red Hat has introduced a pricing mechanism that adjusts according to the number of vCPUs or cores allocated to a VM. Consequently, the subscription price now directly correlates with the resources utilized. The new three-tier pricing model offers discounts per vCPU or cores for larger instances.

The updated pricing structure brings about two notable outcomes. In particular, subscription fees for smaller instances can decrease as charges are based on consumed resources rather than a fixed rate. On the contrary, pricing now scales without any limitations, potentially leading to significant costs, especially for larger instances.

For detailed insights and cost estimations, the table below represents various configuration examples and cost calculations in Euro (€). Calculations are done on a monthly basis (30 days = 720 hours). Please ensure to confirm pricing details specific to your currency by referencing the updated price list corresponding to your regional IONOS entity.

VM Cores	OLD RHEL Subscription Model	NEW RHEL Subscription Model
2 Cores	36,00 EUR (0,05 x 720)	18,72 EUR (2 x 0,013 x 720)
4 Cores	36,00 EUR (0,05 x 720)	37,44 EUR (4 x 0,013 x 720)
8 Cores	86,40 EUR (0,12 x 720)	74,88 EUR (8 x 0,013 x 720)
9 Cores	86,40 EUR (0,12 x 720)	62,86 EUR (9 x 0,0097 x 720)
12 Cores	86,40 EUR (0,12 x 720)	83,81 EUR (12 x 0,0097 x 720)
16 Cores	86,40 EUR (0,12 x 720)	111,74 EUR (16 x 0,0097 x 720)
24 Cores	86,40 EUR (0,12 x 720)	167,62 EUR (24 x 0,0097 x 720)
32 Cores	86,40 EUR (0,12 x 720)	223,49 EUR (32 x 0,0097 x 720)
127 Cores	86,40 EUR (0,12 x 720)	886,97 EUR (127 x 0,0097 x 720)
128 Cores	86,40 EUR (0,12 x 720)	792,57 EUR (128 x 0,0086 x 720)

Which services are affected by the RHEL subscription model change?

IONOS offers RHEL versions 8 and 9 as public images across all locations, with the new subscription structure applying to both versions.

These public images are compatible with IONOS Compute Engine featuring dedicated cores and vCPUs, as well as IONOS Cubes with exposed vCPUs. The updated subscription model is standardized across all types of compute resources, whether dedicated cores or vCPUs, aligning with the pricing outlined in the current price lists.

Additionally, IONOS maintains a Red Hat Update Infrastructure (RHUI) to facilitate update and patch requests for RHEL workloads deployed within the IONOS Public Cloud. The use of the IONOS RHUI service for update management remains complimentary and will continue to be offered without any additional charges.

When does the new RHEL subscription model become effective?

Red Hat has provided a transition window for partners to adjust to the new subscription model. IONOS has opted to implement the transition to the updated subscription model by August 1, 2024. Until July 31, 2024, the existing subscription model and prices will continue to apply to all provisioned workloads.

Note:

The invoice for July 2024 will be the final bill reflecting charges based on the previous RHEL subscription model, while the invoice for August 2024 will mark the beginning of billing according to the new RHEL subscription model. The transition between the two models will be seamlessly executed without necessitating any manual intervention from customers.

Which steps do you need to take to address your RHEL workloads?

No action is needed on your part concerning your RHEL workloads. The transition to the new RHEL subscription model is a commercial adjustment, handled seamlessly by IONOS through our billing services.

Your RHEL workloads will operate without disruption. There is no requirement for you or IONOS to make any modifications to your VM settings or infrastructure setup in response to the subscription model change. No alterations to deployment scripts or automation processes are necessary. You can continue to utilize IONOS services for deploying and managing your workloads as usual.

What are the options to manage RHEL subscription costs?

With the removal of cost caps in the new subscription model, factoring in the actual VM size becomes crucial, recommending a deeper dive into infrastructure planning to explore avenues for enhanced cost efficiency.

With the evolving subscription structure where costs may vary based on VM size, we recommend an evaluation of your VM sizing strategy to drive optimal cost-effectiveness. Highlighted by the illustrative calculations in the above table, smaller instances stand to gain advantages from this updated model, offering fairness by accommodating individual sizing requirements and favoring compact deployments.

One strategy to optimize expenses involves distributing workloads across multiple smaller VMs rather than consolidating them into a few large deployments.

While this approach suits many scenarios, it may not align with all workloads. Consider evaluating if instance performance optimization is feasible. For instance, transitioning from a Compute Engine based on vCPUs to one based on Dedicated Cores can offer dedicated power to workloads, potentially leading to reduced number of dedicated cores requirements and subsequently lowering subscription costs.