A Simple Guide to Optimize Cost on AWSby@exatos
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A Simple Guide to Optimize Cost on AWS

by Suvigya SaxenaOctober 2nd, 2022
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Gartner analysts Craig Lowery and Brandon Medford remark that firms unwittingly squander up to 70% of cloud spending. Businesses must rely on solid governance and user behavior to control and optimize expenses. The primary causes of wasteful spending in the AWS Cloud Services are as follows:  Over-provisioned, idle, and poorly managed cloud resources. AWS's cost optimization tools enable your company to reduce cloud computing costs while retaining the necessary performance and capacity. The following summarizes the primary tools for AWS Cloud cost optimization and management.

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Cloud computing has wide acceptability. It is effectively highly beneficial for all sizes of businesses in real terms from SMEs to enterprises. And no surprise that small to large businesses all are considering or planning to move to a cloud platform.

The cost of managing applications on the cloud is one of the major deterrents that if not stop businesses from choosing the cloud at least delay their plans.

Even large enterprises having a budget for improving operational efficiency cannot skip the worry of the cost of management or cloud development. The scalability, reliability, and agility that come with the cloud are a bit costly, which can become costlier, if not done precariously.

Why the Need for cost optimization

It is often heard that AWS is expensive. It is not completely wrong, but most of the time it is the selection and implementation of resources that is the culprit. AWS offers more than 200 feature-rich services with multiple options and choices. The wide range of services often urges managers to make mistakes in absence of proper cost planning and understanding.

Some of the common occurrences that magnify the cost of AWS are as follows

1.  Unawareness about cost optimization facilities of AWS is quite common. Saving plans for example allow you to commit the maximum spending you want to do on AWS. This prevents abrupt pike in your expenses.

Not using Spot instances or reserved instances is another common Mistake. These instances come with heavy discounts, 50-90%, and can be pivotal in playing down the cost.

2. Unused and under-used resources is perhaps one of the most common mistakes. You may have EC2 instances running that you do not
need. You may even have services like EBS or load balancers that you do not use and incur regular costs.

3. We have already said about under-used and unused resources here is the major reason that pushes managers to make these mistakes.
Not using Auto-scaling. So, when demand increases you add too many resources which later remain unused or under-used.

Not utilizing the Auto-scaling feature of Aws wherever it is available is another major reason for the high cost.

4.  Even after following all the above points many organizations over-tap AWS resources because of an incomplete understanding of on-prem application or requirements of their public cloud. Lack of knowledge of
the minimum requirement often urges managers to engage more resources and services and pay a higher cost.

Manage your spending on AWS

So, it is pretty obvious that cloud cost optimization is important and a necessary step while planning for migration. AWS itself has made sincere efforts to let its user’s match the spending to services availed. There are AWS cost optimization tools that can be of help, and a little change
in the approach is what else is needed.

Let us begin with tools. These can help even those businesses
that are already on AWS and struggling to keep cost under control.

AWS Pricing Calculator

It is also referred as AWS TCO calculator (Total Cost of Ownership). This tool helps you to identify the cost of hosting, managing, and running services on AWS. The major three components that incur cost on AWS are –

1. Data Transfer

2. Storage

3. Computing

With TCO calculator it is much easier to calculate the cost of computing, data transfer, security protocols and storage with minimum requirement. You can create use cases and calculate the cost, and also, get a view of ongoing setup that gives a clear view of unused and under-used resources.

AWS budget

AWS budget allows you to restrict spending on AWS services. You receive alert message through SNS whenever your cost is about to exceed. It
also does forecast in case your cost is expected to exceed the defined budget.

AWS Billing Dashboard

The billing dashboard of AWS gives you a complete picture of your current spending. It comes with different sections like –

AWS Summary – It gives you details of costs incurred by all services, regions, service providers, and other KPIs.

Highest cost and usage details – This section shows the region, service, or account estimated month to date to incur the highest cost.

Cost trend by top 5 services – You can see the cost trend of the top 5 services in the last three to six months.

Account cost trend – This shows the top 5 accounts incurring the highest cost in the recently closed 3-6 months.

Cost Optimization pillars of AWS

AWS suggests the following as five pillars for cost optimization. These help in reducing unwanted costs by availing services and resources that are needed.

1.  Right sizing for efficiency – AWS suggests that you should use the smallest possible instance or the least expensive one to meet the performance of your application. You should also downsize your existing resources wherever you possibly can.

To achieve this in the best manner understand the resource requirement of the application first. Also, consider the demand fluctuation that arises during different times of the year. With this understanding, you can right-size your public cloud and spend exactly what you should.

2.      Leverage Reserved Instances

Reserved instances help you achieve higher cost saving. These instances
are available at high discounts for a certain time period. If you have a clear
and accurate understanding of your application’s resource requirement you can very well assess the kind of resource you will need, and the duration for which you will need it.

3. Increase Elasticity – AWS recommends
this as the third pillar for cost optimization. Increased elasticity means you
can turn-off the resources that are not in use for a certain duration. This
saves unused uptime and unwanted cost.

4. Cultivate accountability – Once your organization has decided to move or is already on AWS you need a team to measure, monitor and improve. To achieve this, make maximum use of AWS tools that give you regular updates about the usage and the resources that are needed
or not needed. With regular monitoring, you can gradually eliminate the
resources, services, and KPIs incurring an unwanted cost and achieve the optimum cost mark.

5. Improve Storage – Most of the storage is chargeable in AWS. To cut down the cost by using storage services wisely is one of the five pillars for cost optimization. You can classify the data according to its need. One that is seldom needed can be stored in a space that is available at a lower cost. Proper storage brings a substantial difference in cost.

Follow AWS cost optimization best practices

These best practices along with helping you in achieving cost optimization also help you in looking deeply into your requirements. These practices urge you to follow the right path with correct steps taken one after another. Take into account these practices before or after cloud migration.


For many, calculating optimum cost on AWS may appear a tedious
and near-impossible task. But if you can follow the smart way it is not
unachievable. It is in the interest of Amazon too that people make use of their
services more and more. The company provides many tools and also educates people on how to make optimum use of their services without spending extra.

In most cases, it has been found that lesser knowledge about their own application or public cloud requirement pushes organizations to over-engage resources and services and eventually pay more. Understand your requirements first as deeply as possible before tapping onto AWS resources and services.