The typical AWS bill, otherwise known as the AWS Cost and Usage Report, includes line items that are useful to both finance and DevOps. However, many of the metrics that are within engineers’ and cloud architects’ control aren’t so simple to discover. To make cost a first-class operational metric for DevOps, teams need visibility into the data that’s relevant to engineering activity. We’ll walk you through the major components of the AWS bill, and show you the key metrics DevOps should focus on.
EC2 Reserved Instance Pricing vs. On-Demand Pricing
One of the best (and often most unpredictable) elements of cloud infrastructure is the ability to scale up and down quickly. If your team has an idea of roughly how much capacity they’ll need in a year (or several years), AWS EC2 Reserved Instance (RI) Pricing can provide a significant discount over on-demand pricing (up to 75%). There are two types of RIs teams can choose from: Standard or Convertible.
Standard RIs are purchased on a one- or three-year term, and customers need to distinguish the Availability Zone, networking type, and instance size they need for that time period. There’s a little bit of flexibility baked into this structure, but AWS customers who need more flexibility often choose Convertible RIs instead. Convertible RIs offer the ability to use different instance families, tenancies, or operating systems during the term of the deal.
Once teams exceed their RI capacity, On-Demand pricing kicks in. AWS EC2 On-Demand Pricing lets teams pay by the hour or second, which eliminates some of the complexities around planning, purchasing, and hardware maintenance. However, On-Demand Pricing comes at a premium, and is often highly variable depending on the month.
Top AWS Discounts and RI Credits
Luckily, most if not all organizations take advantage of AWS discounts and RI credits, which can significantly reduce the AWS bill. Finance or operations teams often negotiate these discounts up front. Popular signup credits include the AWS Promotional Credit (up to $15,000), AWS Support Credits (up to $5,000 to be used toward an AWS Business Support plan), and AWS Training Credits (80 credits for self-paced training labs).
Beyond activation benefits, there are other popular credits and discounts organizations commonly take advantage of, including AWS Volume Discounts for heavy usage and AWS Enterprise Discount Program (AWS EDP) for larger enterprise deals. While discount programs can certainly save organizations money, there are few major areas of the bill that DevOps teams can zero in on to save even more.
AWS Metrics that Should Matter to DevOps
There are several aspects of the AWS bill that are required knowledge for engineers and cloud architects to do their jobs effectively. Most of the most important metrics for DevOps center on usage, including Compute, Database, Storage and Data Transfer. For example, certain systems or workloads don’t have critical schedules, so engineers may be able to take advantage of AWS EC2 Spot Instances (which can represent a 90% discount over On-Demand pricing) to lower their cloud infrastructure costs. Usage data would show a developer that the system or workload may be over-provisioned.
CloudZero’s “Real Cost” metric can help developers and cloud architects understand the cost of their usage, as well as their EC2 RIs. Real Cost amoritizes the upfront reservation fee across the term of the reservation (typically one or three years). In addition, it averages the hourly cost for “like” RIs as a blended cost. For development teams that share RIs from a master account, this metric can calculate a fair and equal price for each hour’s instances, regardless of the type of instance or reservation in use (as long as the instances are the same type). This fair and equal price is an important accounting practice for DevOps, since RI pricing is typically managed by finance or operations (and is outside the engineering team’s control).
Rather than stress about factors beyond their control, DevOps should be empowered with the right data to make better cloud cost decisions. Ultimately, engineers want to do right by the business and build better, more efficient systems. Once cost becomes a part of the workflow, DevOps may find that their role in reducing cloud costs is more active than they ever expected.
Learn more about how CloudZero can help decode your AWS billing data and provide custom insights for your team.
The Cloud Cost Playbook
The step-by-step guide to cost maturity
