So, technically this is the second EC2 instance I built to run this website. The first one was a bit beefier, but it was way more expensive -- $4.50/day expensive. Yes, that doesn't sound like much, but, I am working on a shoe-string budget, and would like to get into the black (financially speaking) as quickly as possible.
A big part of the reason the first EC2 instance was so expensive -- besides that it was essentially 4x as powerful -- was because it was an On-Demand instance. When you first get into your AWS account's EC2 service console, you are prompted to 'Launch instance', and that starts a wizard to help you build your virtual server (which is what an EC2 instance is.) That wizard will only ever create an On-Demand EC2 instance.
You can start with an On-Demand instance and then provision a Reserved instance afterwards -- because, Reserved instances are not even an EC2 instance. Rather, they are sort of like 'vouchers' -- which you can buy and sell, by the way -- for an EC2 (On-Demand) instance. To acquire the savings over the hourly charge normally assigned to an On-Demand instance, you need to add a Reserved instance to your AWS account's EC2 service console. Provided you have Reserved the same instance-type, your On-Demand instance is paid for through your Reserved instance (voucher.) Without a corresponding Reserved instance, you pay "Full Price", hourly. Confusingly, you build the On-Demand instance in the same EC2 service console, as you use to buy the Reserve instance.