Question: I started out with Amazon EC2 as a monthly host for my project. I am running a 'small' Windows 2k8 instance with SQL server. This is the HW that I am getting:

```
1.7 GB memory
1 EC2 Compute Unit (1 virtual core with 1 EC2 Compute Unit)  [2.7 GHz CPU]
160 GB instance storage
32-bit platform
I/O Performance: Moderate

```

Now I tend to see people stating that they I can get better deals with a VPS, which implies a good deal less than the $90/month I currently pay for EC2... However, this does not seem to be the case. VPS offerings of similar specs (Win2k8/sql/1.7GB etc.) are almost identical in cost, but don't give me the lock-in free advantage of EC2. So, am I missing something?

Answer: 
It is very hard to beat the price of Amazon's EC2 product, especially when you use reserved instance pricing.

If you know that you are going to use your instance full-time for a year, your cost for a reserved small instance is $490.30US annually or $40.85US monthly, plus bandwidth. If you only need your instance for development or where it isn't running full-time then it becomes even cheaper.

Definitely check all of your calculations to ensure you are getting the best deal for yourself.
Did you look into Rackspace Cloud (rackspacecloud.com) or Slicehost (slicehost.com)? Both are owned by Rackspace, but they have different pricing structures that might meet your needs better.

For my needs, I only spend about $11/month + bandwidth for my own cloud hosted server. For me it seems so close in price that having the flexibility of spinning a new server at any time is preferred. VPS usually requires a monthly contract.