diff --git a/src/check_reserved_instances/aws.py b/src/check_reserved_instances/aws.py
index 41337e9..56c9d1f 100644
--- a/src/check_reserved_instances/aws.py
+++ b/src/check_reserved_instances/aws.py
@@ -16,27 +16,6 @@
 # reserve expiration time to report with unused reservations
 reserve_expiry = defaultdict(list)
 
-# normalization factor
-# https://aws.amazon.com/blogs/aws/new-instance-size-flexibility-for-ec2-reserved-instances/
-NORMALIZATION_FACTOR = {
-    'nano': 0.25,
-    'micro': 0.5,
-    'small': 1,
-    'medium': 2,
-    'large': 4,
-    'xlarge': 8,
-    '2xlarge': 16,
-    '4xlarge': 32,
-    '8xlarge': 64,
-    '9xlarge': 72,
-    '10xlarge': 80,
-    '12xlarge': 96,
-    '16xlarge': 128,
-    '18xlarge': 144,
-    '24xlarge': 192,
-    '32xlarge': 256,
-}
-
 def create_boto_session(account):
     """Set up the boto3 session to connect to AWS.
 
diff --git a/src/check_reserved_instances/calculate.py b/src/check_reserved_instances/calculate.py
index ce46ac3..bd0f4e5 100644
--- a/src/check_reserved_instances/calculate.py
+++ b/src/check_reserved_instances/calculate.py
@@ -2,8 +2,30 @@
 
 from __future__ import absolute_import
 
+
 import datetime
 
+RI_BASE_INSTANCE_TYPE = 'large'
+# normalization factor
+# https://aws.amazon.com/blogs/aws/new-instance-size-flexibility-for-ec2-reserved-instances/
+NORMALIZATION_FACTOR = {
+    'nano': 0.25,
+    'micro': 0.5,
+    'small': 1,
+    'medium': 2,
+    'large': 4,
+    'xlarge': 8,
+    '2xlarge': 16,
+    '4xlarge': 32,
+    '8xlarge': 64,
+    '9xlarge': 72,
+    '10xlarge': 80,
+    '12xlarge': 96,
+    '16xlarge': 128,
+    '18xlarge': 144,
+    '24xlarge': 192,
+    '32xlarge': 256,
+}
 
 def calc_expiry_time(expiry):
     """Calculate the number of days until the reserved instance expires.
@@ -18,6 +40,35 @@ def calc_expiry_time(expiry):
     """
     return (expiry.replace(tzinfo=None) - datetime.datetime.utcnow()).days
 
+def convert_instance(placement_key, count):
+    """
+    Used to calculate normalisation factor. Converts an instance type to RI_BASE_INSTANCE_TYPE
+    placement_key is a tuple with the instance type and region: e.g ('c4.2xlarge', 'us-west-2a')
+    count: is an int
+
+    """
+    instance = placement_key[0]
+    region = placement_key[1]
+    family, instance_type = instance.split('.')
+
+    # test if it is a t instance type
+    if instance_type.startswith('t'):
+        print instance_type
+        return placement_key, count
+
+    # test if we know the instance type
+    if instance_type not in NORMALIZATION_FACTOR:
+        return placement_key, count
+    
+    # convert instance to normalised instance
+    multiplier = NORMALIZATION_FACTOR[instance_type] / NORMALIZATION_FACTOR[RI_BASE_INSTANCE_TYPE]
+
+    normalised_placement_key = ("%s.%s" % (family, RI_BASE_INSTANCE_TYPE))
+    normalised_count = multiplier * count
+
+    #print("Normalised placement key -> %s: %s" % (normalised_placement_key, normalised_count))
+    return normalised_placement_key, normalised_count
+
 
 def report_diffs(running_instances, reserved_instances):
     """Calculate differences between reserved instances and running instances.
@@ -38,10 +89,25 @@ def report_diffs(running_instances, reserved_instances):
 
     """
 
+    normalised_running_instances = {}
     instance_diff = {}
     regional_benefit_ris = {}
     # loop through the reserved instances
-    for placement_key in reserved_instances:
+
+    # normalise instances using normalisation factor
+    for placement_key, count in running_instances.items():
+        print("%s: %s" % (placement_key, count))
+        # convert instance type using normalisation factor
+        normalised_placement_key, normalised_count = convert_instance(placement_key, count)
+        count_ = normalised_running_instances.get(normalised_placement_key, 0)
+        normalised_running_instances[normalised_placement_key] = normalised_count + count_
+
+    print("normalised running instances")
+    print normalised_running_instances
+
+    print("reserved")
+    for placement_key, count in reserved_instances.items():
+        print("%s: %s" % (placement_key, count))
         # if the AZ from an RI is 'All' (regional benefit RI)
         if placement_key[1] == 'All':
             # put into another dict for these RIs for processing later
@@ -52,7 +118,8 @@ def report_diffs(running_instances, reserved_instances):
                 placement_key] - running_instances.get(placement_key, 0)
 
     # add unreserved instances to instance_diff
-    for placement_key in running_instances:
+    for placement_key, count in running_instances.items():
+        instance_type = placement_key[0]
         if placement_key not in reserved_instances:
             instance_diff[placement_key] = -running_instances[
                 placement_key]