Amazon has once again reduced the price of its cloud service. This is the 26th time the cloud giant has dropped EC2 pricing in an effort to compete with advancing rivals, namely Google and Microsoft.

But as Amazon Web Services Chief Evangelist Jeff Barr explains in a blog post, this isn’t an across the board cut. It only applies to the cost of new EC2 Reserved Instances running Linux/UNIX, Red Hat Enterprise Linux, and SUSE Linux Enterprise Server.

Writes Barr:

This reduction applies to the Standard (m1), Second-Generation Standard (m3), High-Memory (m2), and High-CPU (c1) instance families. As always, if you reserve more, you will save more. To be more specific, you will automatically receive additional savings when you have more than $250,000 in active upfront Reserved Instance fees.

This latest change applies to all three Reserved Instance models (Light, Medium, and Heavy Utilization) purchased on or after March 5, 2013. Depending on the instance family and region, actual price decreases range from from 0% (South America-Sao Paulo, c1 instance) all the way 27.7 percent (US West-Northern California and Europe-Ireland, m2 instance).

Eligible Reserved Instances now offer a potential savings of 65% compared to equivalent On-Demand Instances. However, the most economical model will depend on actual usage patterns, and Amazon provides some general guidelines to help users navigate the selection process.

According to Barr, users running servers less than 15 percent of the time should stay with an On-Demand Instance, while those with usage rates between 15-40 percent should opt for a Light Utilization Reserved Instance. When the server is running at between 40-80 percent a Medium Utilization Reserved Instance is called for; and above 80 percent, a Heavy Utilization Reserved Instance makes the most sense.

The company is also offering a free trial of AWS Trusted Advisor during the month of March to assist users with optimizing their Amazon spending.

Not everyone is pleased with the announcement, though. First off the lower pricing only applies to Linux instances, so the Windows crowd isn’t feeling the love. And second is the issue of customers who purchased Reserved Instances before March 5. One commenter stated: “Why not allow people who have already purchased reserved instances benefit in some way – i’m 2.5 years way from any cost saving from this!” Apparently, those who bought Reserved Instances prior to this recent change are locked into the previous more costly pricing structure. We’ll let you know if we hear otherwise.