AWS Cost Reduction Tactics and Tips

Many companies rely on Amazon Web Services (AWS) for cloud services. While the benefits of the cloud are well-known, it’s easy to overspend without a cost-effective infrastructure, visibility, and continuous oversight. Your cloud strategy needs to include regular AWS cost reduction reviews to ensure you’re making the most of your spend.

The good news is, there are plenty of resources available to help you. AWS provides many of them, often for free. In fact, while most businesses raise prices over time, AWS has reduced prices and shared the economic efficiencies of scale — more than 100 times since 2006.

With AWS’ large and growing number of available tools and resources, now is a great time to reduce your AWS costs.

Read on to learn about fundamental AWS cost-saving steps, including the five AWS design principles for cost optimization in the cloud. We’ll also explore the most common benefits of reducing AWS costs and explain how you can get started. 

What Are My Options for Reducing AWS Costs?

AWS offers several discount options to reduce the cost of on-demand instances. From different types of Elastic Compute Cloud (EC2) instances to other bulk discounts, here are four opportunities to reduce AWS costs.

Reserved Instances 

With reserved instances (RIs), AWS offers discounted rates for customers based on long-term commitments of one to three years. This allows you to reserve instances and use them as you need, with discount options available for upfront payments.

Spot Instances

Amazon EC2 Spot Instances can offer discounts of up to 90% by using spare computing capacity. Spot instances are best for fault-tolerant workloads because demand prices can change rapidly. One potential drawback is that service interruptions can occur with little notice if capacity becomes limited.

Savings Plans

Savings plans offer flexibility to customers based on commitment periods and spend levels. AWS Savings Plans services include Amazon EC2, AWS Fargate, and AWS Lambda. 

Volume Discounts

AWS considers all accounts in an organization as one account for billing purposes. Some services, such as AWS Data Transfer and Amazon S3, may qualify for lower pricing based on volume pricing tiers. Check out the AWS billing and cost management user guide to learn more and see whether you qualify.

3 Benefits of AWS Cost Reduction

The AWS cost-reduction process requires a holistic approach to analyzing and addressing workflow issues. Going through this exercise yields immediate financial benefits while helping other areas of your business. Here are some of the most important benefits of reducing your AWS cost.

Optimizing Resources

The cost-reduction process is also an exercise in optimizing your resources. Doing this can immediately reduce your expenses because you avoid overpaying. It can also optimize your resources for future use. For example, by choosing the right instance type for your workloads, you ensure you’re not wasting resources on unnecessary services today or down the line.

Improved Agility

Cost-reduction efforts contribute to improved agility because they free up your team for other important tasks, such as development and testing. By having peace of mind with AWS spending, you can respond more quickly to other changing needs in the business. You can also be more flexible with testing new ideas and systems. 

Increasing Scalability

Your AWS cost-reduction exercise should reduce the amount of resources needed to support your applications, leading to improved scalability. As you optimize, you can consolidate resources and reduce waste. The deepest discounts typically require long-term planning. By going through that exercise, you can dedicate resources for future use as you grow. As you continue to save money by optimizing costs, you can reinvest more of your budget into business growth.

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5 Design Principles for Cost Optimization in the Cloud

The AWS Well-Architected Framework provides the following five design principles for AWS cost optimization. Each principle involves a specific action to take.

Implement Cloud Financial Management

Cloud Financial Management (CFM) is the process of analyzing and optimizing cloud costs to gain efficiencies and meet financial goals. AWS makes it clear that CFM is essential to achieve financial success and grow your business using the cloud. 

While AWS offers a Cloud Financial Management solution, managing this independently can be challenging and time-consuming. Because of this, many businesses seek out a Premier AWS Consulting Partner to manage the vast amount of tools and services.

Adopt a Consumption Model

Choosing the right consumption model for your application, such as pay-as-you-go or RIs, is crucial. This decision ensures you’re paying for the computing resources you actually consume and that you can adjust usage based on business needs. Optimizing your cost model avoids wasted expenses and improves budget predictability.

Analyze usage patterns and make educated predictions based on your use case, budget and business needs. Numerous resources are available to help you track your spending, including the free AWS Cost Explorer tool. 

Measure Overall Efficiency 

Understand your application's output, along with the costs involved in producing that output. These calculations provide you with a clearer view of your system efficiency, which can help you make more informed business decisions. Pay attention to key metrics, including traffic, CPU usage and memory usage, to better understand your application’s performance and identify bottlenecks or other optimization opportunities.

Stop Spending Money on Undifferentiated Heavy Lifting

AWS enables you to offload a range of tasks, such as server and storage maintenance. Removing those maintenance burdens provides your team with staffing flexibility and more time to focus on your business and customers. Over time, this drives a greater return on your investment.

For example, Auto Scaling can help you scale resources automatically based on demand, removing the need to manually check instances and make adjustments. 

AWS also offers services such as Amazon CloudFormation and AWS Elastic Beanstalk, which can automate processes such as provisioning and deploying applications. Taking advantage of these services can save you time and money while optimizing costs and performance.  

Analyze and Attribute Your Expenditure

Forecasting requires an accurate sense of where you’ve been, and this is especially true when making spending decisions. When you accurately track costs, you have greater transparency into your operations, make smarter ROI assessments and identify cost-saving opportunities with confidence.

The cloud makes it easy to track costs in detail, including options to assign expenses to specific product teams or business owners. This type of tracking creates transparency and accountability while showing how changes in spending would affect key stakeholders.

5 Tips to Start Reducing AWS Costs

With hundreds of services available and an almost unlimited range of uses, AWS can provide an enormous opportunity for growth. But that opportunity comes at a price. If you don’t manage AWS spend appropriately, it'll quickly get out of hand. Here are five cost-saving AWS tips to get you started.

Rightsize Your Resources

Make sure you choose the right instance types and sizes for your application. Monitor your usage and look for underutilized resources that can be scaled down to reduce costs. Repeat this process regularly to continuously improve your workflow.

Shut Down Unused Instances

You should only be paying for the resources you actually need and use. If you have unused resources running, you’ll still be charged for any associated data transfer and storage costs. After you’ve rightsized your resources, confirm there are no remaining unused resources to shut down.

One of the most effect ive ways to find and manage these resources is with a Premier AWS Consulting Partner, such as Mission Cloud. For example, we leverage CloudHealth to find unattached EBS Volumes, Elastic IP Addresses and Idle EC2 and RDS Instances. We also use our cloud services platform, Mission Control, to identify Redshift and ELB Idle resources. Shutting down unused instances greatly contributes to your overall cost-saving strategy and optimization of your environment.

Optimize Storage

Depending on your latency and access needs, you may be able to achieve significant savings by choosing the right storage class for your data. There are six Amazon Simple Storage Service (S3) classes available. Storage pricing models can start as high as $0.023 per GB for S3 Standard pricing. Rates as low as $0.00099 per GB are available for select low-cost storage tiers.  

Configure AWS Auto Scaling

By configuring AWS Auto Scaling, you ensure you are running the correct number of instances to meet your application’s demand. This automation reduces the need for manually scaling resources, saving time and money. Auto Scaling can also help you track utilization levels and scale resources accordingly to keep costs under control. 

There are several ways to set up Auto Scaling, including using AWS Management Console, the AWS Command Line Interfaces or AWS SDKs. AWS also offers a simple Auto Scaling guide to help you get started.

Adjust or Resell RIs 

In some cases, AWS allows you to repurpose RIs by modifying them to meet your current needs. For example, with Standard RI, you can adjust region or availability zone, networking type and instance size. Convertible RIs enable you to exchange yours for another with a different configuration. The changes can include instance family, operating system and tenancy. 

If you prefer, you can also resell convertible RIs through the AWS Marketplace to recover costs. To do that, you must register as a seller in the Reserved Instance Marketplace and the RIs you’re selling must have been active in your account for at least 30 days.

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Continuously Optimize for the Best Results

AWS cost reduction needs to become part of your routine and culture. Besides spot checks, you should also consider AWS Cost Explorer or other cost-management tools to analyze your usage and costs over time. Because optimization is a continuous process, you’ll have plenty of opportunities to experiment with the available resources and find what aligns with your needs and goals.

Ultimately, one of the most effective ways to achieve AWS cost reduction is to partner with a Premier AWS Consulting Partner, such as Mission Cloud. These certified partners are experts in the platform and provide valuable guidance and support. They can help you take advantage of the available resources and maximize your savings.

Check out how you could save up to 5% on your AWS bill now and up to 20% in the future with the Mission Instant Discount Program.  

FAQ

1. How can businesses effectively track and manage their AWS spending in real time to prevent budget overruns?

Businesses can effectively track and manage their AWS spending in real time by utilizing AWS Cost Explorer, AWS Budgets, and AWS CloudWatch. These tools offer detailed reports and analytics on usage and expenditures, enabling companies to set custom budgets, receive alerts for potential overspends, and visualize spending trends. This helps them make informed decisions to prevent budget overruns.

1. What strategies exist for optimizing data transfer costs, as these can be a significant part of AWS expenses?

To optimize data transfer costs on AWS, businesses can use services like Amazon CloudFront for content delivery to reduce costs associated with out-of-region data transfers. Additionally, optimizing data storage and transfer operations by selecting appropriate storage classes and using AWS Direct Connect to transfer large volumes of data can significantly reduce expenses.

1. Can AWS's machine learning and artificial intelligence services be leveraged to predict and reduce costs, and if so, how?
2. AWS's machine learning and artificial intelligence services can be leveraged to predict and reduce costs by analyzing usage patterns and forecasting future costs. Services like AWS Cost Explorer's predictive features enable businesses to identify cost-saving opportunities and inefficiencies in their AWS usage, allowing for more strategic resource management and allocation to minimize expenses.