With the coming of the COVID 19 pandemic and ensuing lockdowns, the adoption of cloud technology had skyrocketed across the globe. This trend has moved into 2021 also with most of the world returning to normalcy. One of the biggest winners of this cloud race is Amazon Web Services (AWS).

In April of 2021, AWS reported 32% yearly growth and accounted for 32% of the $41.8 billion cloud market in Q1 2021. AWS has become a very dependable source of income for the company. This is not because of the early entrant advantage of AWS (launched in 2002), but because of the features they offer and the cost optimization solutions they provide.

Cloud, with proper planning, can be a great way to reduce your IT cost, without compromising on performance. AWS is a solution that is highly sought after, and hence we decided to make this guide on how cost (a major factor for any business) can be optimized to get the best out of your AWS digitalization plans.

In this blog, we will look at

  1. AWS pricing strategy
  2. AWS cost management tools
  3. Best practices to manage AWS cost

AWS Pricing Pillar

Before looking at the AWS cost optimization methodology it is best to first understand the pricing options or strategies of the Cloud platform. You will get a better understanding of what you want and which suits your business.

Pricing Strategy How it works
Pay as you go Suitable for workloads that have volatile peaks or have special scalability needs. You will only be paying for the computing resources that are utilized and calculated by the hour.
Save less when you commit The AWS compute and AWS Machine Learning, Savings plan offers savings of up to 30% to 50% discount when instances are paid in advance for 1-3 years.
Pay less by using more This is a tiered pricing model where the more you use the less you pay. The data transfer IN is free of charge and the price reduces following the principle of economies of scale.

AWS Cost Management Tools

Amazon provides a host of free tools that help manage and optimize costs. These tools provide data that help make decisions, create rules, and automate activities that help save money.

  • Cost Explorer

The cost explorer is a tool that will provide data by analyzing your usage and cost. It provides you with the usage of AWS instances and the cost incurred in the last 12 months and predicts the trend for the next 12 months. It will also provide recommendations for which reserved instances to purchase.

  • AWS Trusted Advisor

This tool provides recommendations that follow the AWS best practices. The AWS trusted adviser evaluates your account and provides ways to optimize your infrastructure, security, performance, and cost. For cost optimization, it will provide information like idle or unused instances that can be deleted.

  • AWS Budgets

AWS Budgets allows you to set a threshold for any use case, be it simple or complex. You will be alerted if your budget is met or exceeds the threshold via an email or Simple Notification System (SNS).

  • Amazon CloudWatch

CloudWatch is a tool created for IT managers to keep an eye on their AWS infrastructure. With Cloudwatch you can set up an alert based on the metrics from Amazon services. For example, you can set up an alarm, when resources are underutilized in a Savings plan. This is because the savings plan follows economies of scale i.e. the more you use the less you pay. You can analyze why it is not used and find solutions to either delete or merge with other workloads.

  • Amazon S3 Analytics

This tool helps you analyze storage access patterns, which helps in deciding to move the right data to the right storage class. This feature observes data access patterns and helps to transition from the STANDARD storage to STANDARD_IA (Infrequent Access). There is a price reduction when the data is stored in STANDARD_IA compared to STANDARD storage as the usage frequency is less.

  • AWS Cost and Usage Report

This tool provides a comprehensive report on your usage of various AWS products. It will have line items for each combination of products which Amazon updates once a day in Comma Separated Value (CSV) format. The AWS Cost and Usage Report will contain the usage and costs by the hour, day, month, product, or by tags that were defined by you.

  • Best Practices to Manage AWS Costs

Now that you have a better understanding of Amazon’s pricing strategy and the tools that are available for monitoring your usage and costs, here are the best practices to follow to help reduce your AWS bill significantly.

  • Rightsizing Instances

Choose the right storage and computing environment for your workload. Continuously monitor to upscale or downscale or move to a different storage class to reduce cost.

  • Scheduling instances

As mentioned above, the costing is hourly, so it is best to turn them off when not using an instance. You can automate it by scheduling the time to turn it on and off which will save costs. An example of this will be turning on instances during working hours when testing or developing an application but off the other times.

  • Delete Zombie Assets

Zombie assets is a term used to describe resources or instances that are not used. It is at times very difficult to locate these assets. Some of the typical zombie assets are unattached EBS volumes, obsolete snapshots, idle elastic load balancers, etc.

  • Using Cheaper Storage Tiers

The S3 storage classification from Amazon offers many tiers based on usage and activity frequency. Plan your workload and decide on the storage tier that will suit your needs. For example, data that is not required can be moved to Glacier storage class where the price is $0.004 per GB compared to the standard storage class price of $0.023.

  • Using Reserved Instances

Reserved instances, where you commit for 1-3 years, are a source to gain great discounts of up to 50%. Plan the workloads that will suit this commitment, i.e. workloads that will run for a long period of time.

Final Words

Amazon cost optimization is a continuous process. You need to utilize the tools at your disposal to the fullest and motor the usage and costs diligently. You can also opt to hire a Cloud Managed Services Provider (MSP) to manage your Amazon account. All you need to do is assign a budget for your projects and let the MSP take care of your costs. Ziffity with our certified experts can help you bring down your AWS bill without any compromise on the performance. Get in touch with us for a free consultation.