Optimizing cloud costs is the top priority for many organizations. Follow these 10 best cloud cost optimization practices to save almost 60% on your next cloud bill.

Everyone should be aware of organization’s main goals. While customer growth may be the top priority for startups, increasing margins is the objective for large businesses.

When DevOps understands these goals, it is easy for them to make day-to-day as well as high-level decisions balancing customer needs and business value.

Whether you’ve been operating on the cloud for a few months or years, it’s sometimes challenging to gain visibility into the drivers of your cloud spending.

As per the Gartner report, 70% of cloud costs are estimated to be wasted. So instead of seeing the cost savings from the cloud, you may find the prices accelerating.

While this may indicate growth, like adding more customers or releasing more products, without proper visibility, you can’t know how much and why your costs increase and what you can do to optimize them.

As a result, solid cloud governance policies can help manage some of these problems, but cloud cost optimization is key to maximizing the value of your cloud resources.

Companies have implemented the best procedures, platforms, and solutions to support this push.

This article will explain various cloud cost optimization best practices that can help you to build a  strategy to reduce cloud bills. 

Table of Contents

What is cloud cost optimization?

Cloud cost optimization is the practice of reducing or rightsizing your overall cloud spending with some common strategies. These include:

  • Identifying mismanaged resources 
  • Eliminating unnecessary waste or processes
  • Rightsizing your computing services
  • Implement cloud cost optimization tools or platforms to gain visibility where there is maximum spending.  

Let’s take a closer look at these strategies and steps to help you optimize your cloud costs.

10 ways to optimize your cloud costs

Cloud cost optimization is the need of the hour for many businesses struggling with burdening cloud expenditures. Below are ten cloud cost optimization best practices that can help you reduce your cloud costs effectively.

1. Identifying mismanaged resources

Mismanaged resources are unused or unattached resources you pay for. All environments are prone to unused resources, such as unattached storage volumes, idle load balancers, and instances. 

But it’s easy to forget to turn off these resources when not in use. Sometimes, even after terminating a temporary server, you may forget to remove its storage. This means you’re wasting resources, but you’re also paying for what you’re paying for.

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Monitor your cloud to identify performance bottlenecks

First, scan your Azure and Amazon Web Services (AWS) bills to optimize cloud costs. If you find charges for resources you once purchased but no longer used, it’s time to get rid of such idle and unattached resources to lower your running costs.

As a developer, it’s also important to maintain your sandbox environments to ensure all spun-up instances are cleaned up or shut when they’re no longer required.

Besides identifying and eliminating unused and unattached resources, you must also remove idle resources by consolidating computing jobs into fewer instances. 

2. Monitor cost anomalies

Use Observability tools like Middleware that offer the cost management console to detect and monitor usage, set budgets, forecast AWS costs, and optimize your overall cloud costs. They can identify spending anomalies with the help of machine learning functionality. 

An advanced altering system allows you to set benchmarks to notify you when you exceed expected spending thresholds. This approach can help you analyze an anomaly’s root cause, preventing unexpected costs and sticking to your planned budget.

3. Use autoscaling to reduce costs

Autoscaling monitors your applications and adjusts your server capacity to maintain steady performance at the lowest possible cost. It also saves time and manpower by eliminating the need to respond to traffic spikes in real-time. Instead, it automatically activates the required resources and instances by changing the number of active servers.

An example of autoscaling to save costs is managing apps during busier and slower periods by allowing the server to adjust to demand automatically.

4. Use reserved instances (RI)

While most businesses prefer on-demand pricing models, it’s not your only option. For example, reserved instances (RI) offer a 75% discount on cloud services where you pay in advance for a specific cloud capacity for a predetermined period (say, one year). 

So, purchasing a reserved instance can save you money if you have a steady workload and don’t anticipate a need to scale up or down in a particular time frame. 

Another alternative worth considering is a spot instance. Cloud providers sometimes auction spare computing capacity at reduced rates. You can purchase spot instances for discounted cloud services. 

5. Consider moving to a microservices environment 

Most organizations migrate to the cloud environment from on-premises without modifying them. Because they feel that this can be a fast and cost-saving option, but it may lead to moving on-premises inefficiencies to the cloud, leading to runaway costs. 

Identify unused cloud resources and save upto 40% on your cloud bill.

You can save lots of time and funds to move from legacy applications to microservices based architecture. You can partially move some elements to the cloud, considering limited resources. You can make incremental design changes to eliminate inefficiencies that could increase cloud waste.

6. Use heat maps to understand what’s going on in your system

Heat maps are your friends when it comes to optimizing cloud costs. A heat map is a visual tool that shows the peaks and troughs in computing demand. With this information, you can estimate whether any of your services could shut down at specific times without disrupting other services.

Identifying such resources and configuring schedules to run them only when needed eliminates payments for unused services and reduces your cloud costs. For instance, a heat map can show you whether you can safely shut down your development servers on weekends.

7. Rightsize computing services

You need a complete overview of your cloud services to rightsize. For this, you may have to recentralize your IT or ensure each department operates on cloud environments using the same account. 

For example, you can identify the over-provisioned or idle assets with granular visibility. In addition, the rightsizing tool recommends changes to ‘rightsize’ usage and reduce costs. Such tools also optimize the cloud by helping you achieve peak performance from the paid resources.

A rightsizing tool sends you notifications when the costs go over a defined percentage in a predetermined period. You can also configure the tool to terminate unused assets after this period to continue optimizing your cloud costs.

8. Consider multi-cloud vs. single cloud

Some companies seek out multi-cloud solutions to avoid vendor lock-in. This is a valid strategy for increasing uptime and availability, but this comes with cost-losing potential volume discounts by a single cloud vendor.

For example, if a company’s cloud spending is $200,000 on AWS + $500,000 on Azure + $300,000 on Google Cloud Platform, they could miss out on reaching a $1 million mark with one vendor. Therefore depending on the size of organization and business needs, one has to make a decision that is overall beneficial.

Additionally, there are administrative hassles of switching between platforms, paying for network traffic between clouds, and training staff on multiple clouds could, therefore this should be kept in mind while thinking to save money with a multi-cloud strategy.

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9. Utilize real-time analytics to make quick cost decisions.

When team members have access to the necessary information at the right moment, they can make informed decisions that positively affect the bottom line and enhance product quality. It is important to identify cost-saving opportunities early on, rather than realizing them too late.

By monitoring cost indicators and identifying any unusual patterns, you can determine if your costs are staying within normal ranges or if there are activities that may result in excessive spending.

Therefore, address any issues as soon as they are identified, this will prevent further losses or increase resources to support workloads that drive higher revenue.

10. Eliminate the shadow IT practices

Most of your cloud spending is attributed to projects managed outside (and without the knowledge of) your IT department. This is known as shadow IT adds significantly to your costs when employees sign up and use a company’s cloud resources for personal use. 

Shadow IT increases costs and leads to unaccounted data access and security risks. Therefore, educating your workforce about shadow; IT dangers is essential, as taking steps to prevent unauthorized cloud access. For example, you should hold regular audits and block unsanctioned apps.

Bonus: Using third-party cloud billing reporting tools

Never get surprised by your cloud bill again if you plan to use cloud billing tools like Middleware, or Cloudzero

A budget breakdown can be obtained for each business unit, user, project, and CI/CD job. Advanced budget reports for the cloud, adaptable warnings, personalized labeling, and TTL rules all work to keep your multi-cloud bill under control.

Most cloud reporting solutions also function as cloud business intelligence tools, allowing stakeholders to receive real-time insights and quickly make choices like Middleware.

Things to know before moving to the cloud 

To keep the cloud from transforming into a cost center, involve experts in planning your move to the cloud. You must remember a few things to make the right cloud optimization decisions.

  • Review the SLAs: When choosing a service provider to architect your cloud transformation, it’s worth checking their service-level agreements (SLAs) and how they match up with your internal SLAs.
  • Integrate seamlessly: Upgrading to new software shouldn’t require an overhaul of your entire IT setup. Instead, check if the new software can complement your existing infrastructure – which is essential for cutting costs and minimizing downtime.
  • Evaluate scalability: Does your cloud provider allow scalability in line with your needs? Scalability is the main benefit of shifting to the cloud. It’s worth reviewing whether you can customize the application to meet your demand patterns or future expansion plans.
  • Assess operation quality: It’s worth comparing the quality of cloud and on-premise data security of a dedicated cloud provider. You should also check how their team is staffed and if someone is always available to assist you.
  • Review security policy: Data security is an organization’s primary requirement. Ensure you review the cloud provider’s security and privacy policies and comply with your company policies.

Finally, to calculate your costs and determine the optimization level, you could use the total cost ownership (TCO) calculator or a similar service to estimate your cost savings over a specific interval.

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The bottom line-optimize tomorrow’s costs today

Cloud cost optimization is not a one-time activity but an ongoing process, and cutting cloud expenses is not just the responsibility of IT but the entire organization. 

It is necessary to regularly review and assess your cloud costs to ensure that you are using the most cost-effective solutions for your needs. By implementing the strategies discussed in this article, you can effectively manage your cloud costs and ensure that your organization is getting the most out of its cloud investment.


How do I reduce my cloud cost?

Ten ways to reduce cloud costs

  1. Identifying mismanaged resources
  2. Monitor cost anomalies
  3. Use auto-scaling to reduce costs
  4. Use reserved instances (RI)
  5. Consider moving to a microservices environment 
  6. Use heat maps to understand what’s going on in your system
  7. Eliminate the shadow IT practices
  8. Consider multi-cloud vs. single cloud
  9. Utilize real-time analytics to make quick cost decisions.
  10. Using third-party cloud billing reporting tools

Why is cloud cost optimization important?

Cloud cost optimization is crucial because you reduce unnecessary cloud spending and maximize business benefits. You just want to pay for cloud resources that deliver the most added value for your business. By using the best practices of cloud cost optimization, you can reduce your cloud waste.

What are the four pillars of cost optimization?

Cost Optimization Pillars

  • Define and enforce cost allocation methods.
  • Define metrics, set targets, and review at a reasonable cadence.
  • Provide proper training, progress goals visibility and incentives to the ream.
  • Assign an individual or a team to take optimization responsibility.

What are the best practices for cloud cost optimization?

There are ten best practice areas for cost optimization in the cloud:

  1. Identifying mismanaged resources
  2. Monitor Cost Anomalies
  3. Use auto-scaling to reduce costs
  4. Use reserved instances (RI)
  5. Consider moving to a microservices environment 
  6. Use heat maps to understand what’s going on in your system
  7. Eliminate the shadow IT practices
  8. Consider multi-cloud vs. single cloud
  9. Utilize real-time analytics to make quick cost decisions.
  10. Using third-party cloud billing reporting tools

What is AWS cost optimization?

Optimizing AWS costs is not a big challenge if you understand their flexible pricing model and practices. You can take control of cost while continuously optimizing your spending, and building modern, scalable applications to meet your needs.

Explore AWS’s breadth of services and pricing options offer the flexibility to manage your costs effectively and keep the performance and capacity you require.