While there are many advantages to using Amazon Web Services (AWS), cost management can be complicated because so many factors impact your AWS bill. Account setup, savings plans, and a number of other factors can all affect your AWS charges and usage.
In this article, we’ll introduce 15 AWS cost management best practices that promote optimization and how you can go beyond AWS cost management by using an advanced cloud cost intelligence tool.
If you’d like to learn more, you can read more about each of these topics in AWS Cost Optimization: A Guide To Managing Your AWS Bill.
What Is Cost Optimization In AWS?
Cost optimization in AWS refers to adjusting your AWS usage and resources to reduce costs without compromising on the performance or capacity needed for your organization’s operations. It involves a continuous cycle of monitoring, analyzing, and refining your cloud resources to ensure you’re running your AWS infrastructure efficiently.
This practice encompasses strategies such as selecting the right AWS services, effectively utilizing pricing models like Reserved Instances and Savings Plans, and eliminating wasteful or underutilized resources.
Cost optimization in AWS aims to lower your cloud bill. It ensures that every dollar spent maximizes the company’s value, aligning cloud expenses directly with your operational needs and strategic objectives.
The Benefits Of Optimizing Costs
Optimizing your AWS costs brings a range of advantages that extend beyond mere savings. Here are some of the main benefits:
- Enhanced financial efficiency. Reduce overall cloud expenditure, allowing for more strategic allocation of your budget towards areas of innovation and growth.
- Improved resource utilization. Identify and eliminate underused or unused resources, ensuring you pay only for what you need and use.
- Increased operational agility. Gain the flexibility to quickly adjust resources in response to changing business needs without financial constraints.
- Better forecasting and planning. Optimized costs make forecasting future expenses more accurate, facilitating more effective financial planning.
- Sustainability. By streamlining resource usage, contribute to sustainability goals by minimizing the environmental impact of your cloud operations.
- Strengthened cloud governance. Establish strong cloud governance practices through clear visibility and managing cloud costs and resources.
- Increased transparency. Encourage a culture of cost awareness and accountability across teams, leading to more informed decision-making.
- Alignment with business goals. Ensure that cloud spending directly supports and aligns with overarching business objectives, maximizing the return on your cloud investment.
15+ Best Practices For AWS Cost Management
Cost management strategies essentially fall into two broad categories: putting the right configurations in place for managing your AWS account and reducing wasteful spending by efficiently managing your cloud assets. The best practices for both categories of cost management strategies are outlined in the following sections.
Set up your Amazon Web Services account for cost optimization
The first step in AWS cost management is to set up your account in a way that makes it easy to track and manage costs. These are the best practices to follow for setting up your AWS account:
- Implement AWS Organizations and consolidated billing. You can automate account creation, create groups of accounts, and govern these groups with AWS Organizations. The consolidated billing feature consolidates the charges for all your accounts, making it easier to get an overview of your cloud costs and manage your bill as a whole.
- Create separate accounts for production and development. At a minimum, separate production workloads from development so you can see the charges associated with each. You can segment further by product or feature, though this can be difficult to manage at scale.
- Create a tagging policy. Tags enable teams to identify, organize, segment, and search for resources within AWS. Activate important tags with cost allocation tagging for use with AWS Cost Explorer or external cost management solutions. You can read more about tagging in this previous article.
- Create an AWS Cost and Usage Report (CUR). Most cost management vendors require CUR data. An hourly CUR is not expensive, and having it ready will be helpful, even if you are not yet implementing AWS cost optimization.
- Implement tools to gain visibility into your costs: AWS Cost Explorer and similar tools can help you plan and manage resources, and gain visibility into the activities generating your costs.
How to optimize AWS costs by reducing waste
In computing terms, waste is a broad category. It can mean anything from “zombie” unused infrastructure or resources to choosing the right savings plan. These are the AWS cost management best practices you should focus on to minimize waste:
- Plan and manage reserved instances (RIs)/choose the right savings plan. For reserved instances, identify underutilized EC2 instances and downgrade their size or move to a different instance family to reduce cost. With the advent of AWS Savings Plans, many users are no longer purchasing RIs. Select the right Savings Plan to handle the flexibility needed for your workloads to control costs.
- Schedule on/off times for instances. Schedule on/off times for non-production instances for developing, testing, and staging. By applying an “on” schedule during weekday work hours, you can save up to 65% on running these instances.
- Delete obsolete snapshots. Snapshots are efficient for backing up data on EBS volumes to an S3 storage bucket. Typically, you only need the latest snapshot to restore data in case something goes wrong, though it’s advisable to keep snapshots for several weeks. Individually, storage costs for snapshots are minimal, but if obsolete snapshots are not deleted and continue to accumulate, they can add thousands of dollars to your bill in unnecessary storage costs.
- Move infrequently accessed data to less expensive storage tiers. Storing non-critical and infrequently accessed data in a lower storage tier can provide substantial savings. Retrieval fees apply to accessing data in these “cold storage” tiers, and it may take hours to retrieve the data, so it’s important to be sure that lifecycle policies avoid migrating rapidly changing transactional data to cold storage. The costs for transitioning this data to Glacier will exceed the savings you would gain from Glacier’s less expensive storage tier.
- Eliminate zombie resources. Unused resources that continue to run can add substantially to your monthly AWS bill. Obsolete snapshots are one example we’ve already mentioned; EBS volumes and unused elastic IP addresses are others.
Additional best practices for AWS cost management
Beyond the foundational strategies for optimizing AWS costs, implementing these additional practices can further reduce expenses and enhance efficiency:
- Utilize spot instances for flexible workloads. AWS Spot Instances can be used for non-critical, flexible workloads to save up to 90% compared to On-Demand prices. They are ideal for batch processing, background tasks, and any workload tolerant of interruption.
- Implement Auto Scaling to match demand. Auto Scaling ensures optimal application performance and cost efficiency by automatically adjusting the number of active instances up or down in response to demand. This means you’re only paying for the resources you actually need at any given time.
- Leverage AWS Budgets to monitor spending. Set custom budget thresholds to monitor your AWS spending and usage. AWS Budgets can alert you when you’re approaching or exceeding your allocated budget, helping prevent unexpected costs.
- Optimize AWS data transfer costs. Data transfer costs can be significant, especially for applications with high data egress. Optimize these costs by minimizing data transfers between AWS services and regions, and leverage AWS’s content delivery network, Amazon CloudFront, to reduce costs and improve application performance.
- Use AWS Trusted Advisor to identify cost-saving opportunities. AWS Trusted Advisor is a tool that provides real-time guidance to help you provision your resources following AWS best practices. It can identify unused or underutilized resources, recommend cost-saving opportunities, and highlight security vulnerabilities, helping you optimize your AWS infrastructure in various dimensions.
Beyond AWS Cost Management: Cloud Cost Intelligence
With a cloud cost intelligence tool like CloudZero, zeroing in on the specific issues driving your AWS costs is simple. CloudZero provides detailed analysis of your cost data sorted by function, user, time, and other metrics, updated in real time, to make waste easy to spot.
CloudZero organizes costs and correlates them to the engineering activity that generated them, giving you the context needed to make cost management decisions. Cost anomalies can be detected quickly and addressed before costs accumulate.
In addition, CloudZero makes costs associated with engineering decisions transparent during the design process. Engineers can build cost-effectiveness into their applications, preventing waste from the beginning.
CloudZero uses machine learning to classify costs and associate them with the processes that generate them, and includes these features to give you maximum control over your AWS costs:
- Unit cost analysis, with costs aligned to key business metrics, such as cost per transaction, customer, message, and more.
- Engineering-level context, correlating engineering and cost data.
- Automated tagging assistance, organizing your resources by product, feature, and team without manual input.
- Relevant team views of cost data, sorted by product, feature, or team and reported directly to the appropriate team’s Slack channel.
- Automatic anomaly alerts, with alerts sent to the appropriate teams
- Real-time, granular cost data capable of updating billions of times per second from 74 different AWS service plug-ins and data streams like CloudTrail and CloudWatch.
Ready To Move Beyond AWS Cost Management To Cloud Cost Intelligence?
CloudZero is the only cloud cost intelligence solution that automatically correlates resource and billing data from across your AWS account to group costs and surface insights.
Instead of spending time identifying the source of cost anomalies, you can concentrate on addressing them.
and see how CloudZero can help your company with AWS cost management.
The Cloud Cost Playbook
The step-by-step guide to cost maturity
