Where does the first 20% discount come from? (And I would completely disregard the second one; if you know someone who has a
high volume account, you can probably get some spare slices just with a polite word.)
More importantly, though: you're assuming Micro instances. Micro instances are tolerable, but not really comparable to anything offered to paying customers at even the most downmarket VPS. The moment you want to burst the CPU of a Micro for any extended period (say, starting up Unicorn workers), your instance will become a chugging morass.
When I was on AWS, I had to go in and reboot my instance every other time I deployed an update to it, because the update process ran just long enough to prompt a 99%-CPU-throttle. At that point my server was basically wedged, since new HTTP requests were still trickling into the old app servers and queuing up (with the throttling, it now was too slow to handle them before more arrived), leaving the CPU unable to "relax" enough to get out of the throttled state even after the deploy was over.
> if you want an always on connection for 1+ years you can get discounts
With a down payment. You have to calculate the NPV of the cashflow, not just the aggregate sum; $10/mo is a lot easier to manage than $100 + $8/mo.
But disregaring that: even with a three-year term--costing $257 up-front, and committing you to payments in a similar way to a cell-phone contract--it looks like an Small will still cost $15.80/mo. Why put yourself in such a bind just for a not-that-good slice? (Network throughput is one of the few acceptable answers to that.)
This does all assume that your app that will live comfortably on any consumer workstation machine for the foreseeable future (its growth has already plateaued, in other words.) If there's any possibility of hockey-stick growth in your app's future, AWS becomes a lot more attractive.