Serverless services save time. When you switch to serverless architecture, you offload redundant cloud management activities to your cloud provider and gain more time to focus on the most important parts of your business — development and innovation.
Even better, you only pay for what you use, so you don’t have to worry about committing to reserved instances or committing to a savings plan.
But there’s a catch.
The event-driven nature of serverless services means that if your applications are not properly architected, you could have significant expenses at the end of the month. For example, if your applications run all the time (as they would in traditional servers), your applications may not be cost-efficient in a serverless environment. So it’s essential to understand serverless pricing and the costs involved.
What makes up your AWS serverless costs?
The most obvious ones are compute and request costs. In AWS Lambda, you are charged based on the number of requests for your functions and the duration it takes to execute your code.
The harder costs to track are networking, data transfer, and API request costs. API requests can also form a significant portion of your costs, especially if your applications make a lot of API calls. In addition, you also incur networking and data transfer charges, and these are often the hardest to track down.
Below are a few ways to monitor and measure serverless costs so you can optimize your spending.
4 Ways To Lower Your Serverless Costs
1. Choose Cost Models That Match Your Usage Patterns
Amazon offers different cost models for its serverless services, including a pay-as-you-go model, provisioned throughput, and provisioned IOPS. These models are designed to help you reduce costs and optimize spending. So the first step is to understand your usage pattern. Carefully review how users interact with your platform so you can optimize accordingly.
For example, if you use your DynamoDB tables all the time, then you should choose the provision model because it’s about seven times cheaper.
But if you have a spiky workload, with peak loads at specific times during the day, then a pay-per-request model may be more appropriate. In general, if you have steady workloads that run all the time, then consider using EC2 instances because serverless services will be more expensive.
2. Use Compute Only When Necessary
Don’t use compute if you don’t have to. Take advantage of other Amazon services that can function without compute. An example is step functions, which allow you to call Amazon APIs without a Lambda function. This means you only pay for the step functions.
Another example is Amazon S3, which is primarily a storage service but it also serves web data and can be used for static websites. The key is to understand the cost implications of your choices and choose the right service.
3. Monitor Costs Proactively
One of the dangers of using managed serverless services is that it scales almost infinitely. If you have a huge surge in traffic, say up to millions of users, you could have a significant cloud bill after the fact.
So the trade-off with serverless is that, while you don’t manage any servers or underlying infrastructure, you do have to monitor costs closely to avoid unpleasant surprises with your bill.
This is why proactive cost monitoring is essential. CloudZero’s anomaly detection feature comes in handy here, because it alerts relevant engineering teams when there’s an unusual spike in costs so you can investigate immediately and take necessary action.
4. Track Relevant Cost KPIs
Adopt relevant usage-based KPIs that allow you to track costs over time and see how those costs relate to your business. Ideally, your cloud costs should go flat or increase only marginally as your customers increase. But if your costs increase faster than or as quickly as your customers increase, then there’s a problem you need to address.
CloudZero is a cost intelligence platform that gives you full visibility into your serverless. With CloudZero, you can align costs directly to product features, customers, or teams and track the KPIs that are most relevant to your business. 
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The Cloud Cost Playbook
The step-by-step guide to cost maturity
