I'm trying to determine if it makes sense to switch our hosting to EC2 from a dedicated dreamhost server, and if so, what EC2 instance type I should choose to get a good idea of the cost prior to switching. I would like to go low and then bump up if need be.
Current Usage:
dedicated server with 4 GB RAM and 4 CPUs
average disk usage: 783 MB average bandwidth: 8.5 GB
This is really all the info I get from our dreamhost control panel, so hopefully it's enough to provide some recommendations on where to start.
Using the calculator located here, I'm leaning towards a t2.xlarge. Is that too much? not enough?
It is not possible for anyone to recommend the 'correct' instance type. This is because it depends on the operation of your particular application. It might be CPU-intensive, RAM-intensive, network-heavy, highly parallel, etc.
Some applications might need to handle occasional spikes of traffic, whereas other applications might be relatively consistent in their load.
The correct way to determine your 'best' instance type is to run tests that simulate the expected application load. If you can create an automated test, then you could run it against many different instance types and compare the performance vs cost.
Also, many applications are designed to be able to run across multiple instances, so it would be better to test various quantities of servers as well as their instance type.
You might also consider using Amazon EC2 Auto Scaling, which gives the ability to automatically add/remove servers based upon workload. This means that you could use much more powerful instances, but automatically turn some of them off during less-used periods. This affects the cost calculation because the more-powerful instances are more expensive, but you won't be using them all the time.
Then, you could also consider using Amazon EC2 Spot Instances, which can be up to 90% less cost but might be terminated when the demand for such instances is higher. You can also combine On-Demand and Spot Instances to give additional capacity at a lower cost.
(Spot and Auto Scaling are only really applicable if you are using more than one instance to host your application.)
And finally, if your application only requires one instance, you could also consider using Amazon Lightsail that combines the price for instance type and network bandwidth to make the price more predictable.
Bottom line: It depends!
One final word: Most companies consider switching to AWS not purely on a cost basis ("if it makes sense to switch our hosting to EC2 from a dedicated dreamhost server"), but rather on the breadth of features that AWS offers that are not available in a traditional server hosting service. If all you need is "a server", it's probably easiest to consider Amazon LightSail or keep whatever is currently working for you. The cost saving with AWS won't be dramatic (or it might not even be cheaper!), but it will offer you a lot more capabilities if you ever grow beyond just requiring "a server".