An AWS Private Pricing Agreement (PPA, also called a Private Pricing Addendum) is the custom contract that layers negotiated service-level discounts and credits on top of an EDP, typically delivering an extra 3 to 12 percent on specific high-volume services beyond the EDP's flat commitment discount. Where the EDP gives one percentage across almost everything, a PPA gives deeper, targeted discounts on the services you consume most. For estates with concentrated spend in a few services, a PPA frequently beats a flat EDP discount of the same commitment size. This page explains what it is and when it wins.
PPA versus EDP versus Savings Plans
These three constructs are often confused because they all reduce AWS cost, but they operate at different levels. Savings Plans and Reserved Instances discount the compute rate in exchange for a compute commitment. The EDP discounts the overall bill by a flat percentage in exchange for a total dollar commitment. A PPA sits alongside or inside the EDP and discounts specific services more deeply than the flat rate, negotiated line by line for the services where your volume justifies it.
| Construct | Commitment | Discount shape | Best for |
|---|---|---|---|
| Savings Plans / RIs | Compute hours/dollars | Rate cut on compute | Steady compute |
| EDP | Total dollar spend | Flat percentage on bill | Broad, diversified spend |
| PPA | Service-level volume | Deeper per-service rates | Concentrated service spend |
What a PPA covers
A PPA targets the services where your consumption is large enough that a custom rate matters more than a flat discount. Common candidates are S3 and data transfer for storage-heavy and distribution businesses, specific EC2 or GPU instance families for compute-concentrated workloads, and high-volume managed services such as DynamoDB, Kinesis, or SageMaker. The agreement sets a negotiated rate or an incremental discount on each named service, often tied to a volume floor for that service.
| Service area | Typical PPA uplift over EDP | Volume trigger |
|---|---|---|
| S3 storage | 5 to 12 percent | Multi-PB sustained |
| Data transfer / egress | 20 to 50 percent | Petabyte-scale monthly |
| GPU compute (P/G families) | 8 to 20 percent | Sustained large fleets |
| DynamoDB / Kinesis | 5 to 15 percent | High sustained throughput |
Eligibility and thresholds
PPAs are generally available to customers already at EDP scale, typically multi-million-dollar annual commitments, and they require concentrated volume in the target services to justify the custom rate. AWS will not extend a meaningful service-level discount on a service you barely use; the pricing power comes from being a large, predictable consumer of that specific service. The practical threshold is less a published number than a demonstration that your forecast volume in the named service is large and durable enough that AWS values locking it in.
The concentration test: Run the test before negotiating. If 60 percent or more of your AWS spend sits in three or fewer services, a flat EDP discount is leaving money on the table, because the flat percentage averages your deep-volume services with your light ones. A PPA lets you negotiate the deep-volume services to a rate the flat discount cannot reach. If your spend is genuinely diversified across many services, the flat EDP discount is the better structure and a PPA adds complexity without benefit. Structure follows concentration.
Credits and ramp
PPAs frequently bundle migration credits, proof-of-concept credits, and committed-use ramp terms alongside the service-level discounts. These credits are real value but they are also a negotiation tactic: AWS uses upfront credits to win the commitment, and the credits expire while the multi-year commitment endures. Model the agreement on the steady-state rates, not the credit-inflated first year, exactly as you would model a subscription on its capped rate rather than its teaser. The interaction with marketplace spend, which can count toward the underlying commitment, is covered in our Marketplace procurement strategy.
How AWS structures a PPA
A Private Pricing Agreement is documented as an addendum to the AWS commercial agreement, layered on or beside the EDP, and it typically expresses each negotiated discount as either a fixed rate for a named service or an incremental percentage off the public rate, frequently gated by a volume floor for that service. The agreement runs for a defined term, often aligned to the EDP, and may include service-specific ramp commitments that mirror the overall committed-spend ramp. Because the discounts are service-specific, a PPA is more complex to administer and to verify on the bill than a flat EDP percentage, so the agreement should specify exactly how each discount appears in billing and how disputes over its application are resolved.
Worked example
Consider an enterprise with a $30M annual EDP at a 15 percent flat discount, where $18M of spend sits in S3 storage and data egress. The flat EDP discount applies 15 percent across the whole bill, including those two services. A PPA negotiated on top might add an incremental 8 percent on S3 and 30 percent on egress, the two concentrated services, while leaving the rest of the bill on the flat rate. On $12M of S3, the extra 8 percent is $960,000; on $6M of egress, the extra 30 percent is $1.8M. The PPA delivers roughly $2.76M of additional annual saving that the flat discount alone could never reach, because the flat rate averaged those deep-volume services with everything else.
| Service | Annual spend | EDP flat (15%) | PPA incremental | Extra saving |
|---|---|---|---|---|
| S3 storage | $12M | $1.8M | +8% | $960K |
| Data egress | $6M | $0.9M | +30% | $1.8M |
| Other services | $12M | $1.8M | none | $0 |
Risks of a PPA
The PPA's strength, its service-specificity, is also its risk. Tying deep discounts to named services with volume floors means that if your architecture shifts away from those services, you can miss the floor and lose the discount while still carrying the overall commitment. A PPA built around a GPU instance family becomes a liability if you move to a newer family the agreement does not cover. The mitigation is to negotiate flexibility into the named-service definitions, to align the PPA term with your architectural roadmap rather than overcommitting to services you may outgrow, and to revisit the agreement at EDP renewal so the discounted services still match where your spend actually concentrates.
Term, renewal, and verification
A PPA's service-level discounts run for a defined term that is usually aligned to the underlying EDP, and the renewal is where the agreement's value is either preserved or quietly lost. Because the discounts attach to named services, a renewal that simply rolls the prior terms forward can leave you discounting services your spend has moved away from while paying flat rates on the services that now dominate. Treat each PPA renewal as a fresh concentration analysis: re-examine where your spend actually sits, and renegotiate the named services to match. The second discipline is billing verification. A flat EDP percentage is easy to confirm on an invoice, but a PPA's service-level rates are not, and discounts that were negotiated but applied incorrectly are a real source of leakage. The agreement should specify how each discount appears in billing, and someone should reconcile the actual invoices against the negotiated rates every period.
These two habits, re-concentrating at renewal and verifying every invoice, are what separate a PPA that delivers its modeled savings from one that erodes. The discipline belongs in the same governance that manages the committed-spend agreement it sits on top of.
Frequently asked questions
Is a PPA the same as an EDP?
No. An EDP is the committed-spend agreement that discounts the whole bill by a flat percentage. A PPA is a service-level addendum that discounts specific high-volume services more deeply, and it typically sits on top of an EDP rather than replacing it.
Who qualifies for a PPA?
Generally customers already at EDP scale, with concentrated, durable volume in the services they want discounted. AWS extends meaningful service-level rates only where your forecast volume in the named service is large and predictable enough to be worth locking in.
When does a PPA beat a flat EDP discount?
When your spend concentrates: if 60 percent or more sits in three or fewer services, a PPA reaches rates on those services that a flat discount cannot, because the flat rate averages deep-volume services with light ones. Diversified spend is better served by the flat EDP discount alone.
Negotiating credits without overcommitting
Credits are the most seductive and most misread part of a PPA. AWS offers migration credits, proof-of-concept credits, and committed-use incentives that lower the first-year cost dramatically, and the temptation is to size the multi-year commitment against that discounted first year. That is the trap. The credits expire while the commitment endures, so a commitment sized to credit-inflated economics becomes a shortfall risk in year two when the credits are gone and real spend has to carry the floor alone. The discipline is to treat credits as a one-time benefit that reduces near-term cost, model the durable commitment strictly against steady-state rates, and confirm in writing how and when each credit applies and expires. Used this way, credits are genuine value: they de-risk a migration and lower the cost of the ramp. Used as the basis for sizing the commitment, they manufacture the shortfall they appear to prevent. The same caution applies to any committed-use incentive that assumes a growth curve steeper than your migration will actually deliver, which is why the credit conversation and the commitment-sizing conversation should be kept deliberately separate.
How to negotiate a PPA
Start from a clean view of your service concentration, then negotiate the deep-volume services as named line items rather than accepting a single blended percentage. Tie each service-level discount to a realistic volume floor, protect against being penalized if a named service's volume shifts, and time the PPA with the EDP renewal so the two negotiate together. Bring competitive tension; a PPA on GPU compute or egress is exactly where a credible Azure or Google Cloud alternative moves the rate. The full sequence sits in our EDP negotiation guide, the EDP pillar, and our committed spend discount guide. For engagement, see the cloud contract negotiation service and the cross-vendor software contract negotiation guide.