What are the different types of EC2 instances based on their costs?

The three types of EC2 instances based on the costs are:

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On-Demand Instance - These instances are prepared as and when needed. Whenever you feel the need for a new EC2 instance, you can go ahead and create an on-demand instance. It is cheap for the short-time but not when taken for the long term.

Spot Instance - These types of instances can be bought through the bidding model. These are comparatively cheaper than On-Demand Instances.

Reserved Instance - On AWS, you can create instances that you can reserve for a year or so. These types of instances are especially useful when you know in advance that you will be needing an instance for the long term. In such cases, you can create a reserved instance and save heavily on costs.