Are you looking to reduce your AWS costs? Here are 10 effective AWS cost-cutting techniques, tools, and tips to help you manage your cloud costs and usage over time.
Amazon Web Services (AWS) is Amazon’s subsidiary that provides on-demand cloud computing platforms and APIs. AWS is metered on a pay-as-you-go basis, and businesses pay based on their requirements. However, managing cloud costs can be complex, and companies often struggle to estimate their expenses accurately.
Upon closer inspection, it becomes clear that many factors are at play. The traditional IT model is being disrupted, and the rapid delivery of new services limits standardization. While convenient, The ease of procurement has led to limited control over-provisioning. Complex billing and usage structures also obscure transparency, making it difficult for businesses to optimize their spending.
Furthermore, using multiple cloud providers has introduced an added layer of complexity. Limited tools are available to automate controls and corrective actions, and accountability is often lacking. Perhaps most egregiously, many businesses fail to leverage favorable pricing models and discounts, leaving money on the table.
So, where exactly is this waste occurring? A closer examination reveals that underutilized or unscheduled resources are a significant contributor. Another area of inefficiency is the failure to implement auto-scaling during peak periods. Selecting the wrong storage class, missing out on volume and purchase-commitment discounts, and navigating the complexities of software licensing in the cloud are also common pitfalls. Lastly, poorly architected workloads lead to unnecessary expenses, further exacerbating the problem.
As there are many variables influencing AWS cloud costs, let’s differentiate several fundamental service types that ultimately result in AWS cost estimates:
- AWS server type.
- Domain costs.
- Number of servers.
- Data transfer costs.
- Database usage.
- Storage capacity and size.
Calculating AWS costs
Businesses often struggle to understand the AWS pricing system and end up paying for more than they use. Note that in AWS, you pay for what you provision, not what you use. Additional services can also increase costs. You must ensure you provision smartly and check if terminated instances cost you.
The top categories of AWS costs include:
- Compute costs: This includes the cost of running EC2 instances and the cost of using serverless services like Fargate and Lambda.
- Storage costs: This includes the cost of using S3 for object storage, as well as the cost of using services like EBS and EFS for block and file storage.
- Database costs: This includes the cost of using services like DynamoDB, RDS, and ElastiCache for data storage and management.
Other services like Networking costs, Management and Governance costs, Security, Identity, and Compliance costs add up to the overall spending.
The great thing about AWS is its flexibility in services and pricing. This can help you better manage costs and significantly reduce them without affecting the service’s performance and capacity.
- Analyze the cost allocation. It’s easy to find out AWS’ pricing using AWS Cost Explorer. It helps you view and analyze which AWS services you use and how much they cost.
- The “monthly costs by linked account” report identifies the top accounts with the highest costs. Then, the “monthly costs by service” report identifies the services contributing to these costs.
- You can use the hourly and resource level granularity and tags to identify cost-saving areas.
10 Practices to reduce AWS costs
Reducing AWS costs can seem daunting, especially if you don’t have the expertise. Here are seven proven practices to help you cut these costs and make your business more efficient.
Identify Amazon EC2 instances with low CPU utilization and autoscale
Identifying low utilized EC2 instances is a great way to reduce costs. If you provision a 16 GiB memory EC2 instance, you pay for the total capacity, not what you use. Cut down provisioning on such instances, as over-provisioned instances are one of the biggest cost drivers of AWS bills.
Use AWS Cost Explorer Resource Optimization to determine which EC2 instances are idle or underutilized. Stopping or downsizing these instances reduces high costs. You can even use the AWS Instance Scheduler to automatically stop instances or the AWS Operations Conductor to resize them automatically.
AWS Compute Optimizer also recommends downsizing instance families and instances as part of an autoscaling group. This autoscaling feature lets you scale your DynamoDB table in and out. You can also use the on-demand option to avail yourself of pay-per-request services that cost less and offer high performance.
With EC2 autoscaling, you can launch Spot instances to meet target capacity. Spot instances can help you cut costs by up to 90% in fault-tolerant workloads like big data, CI/CD, web servers, etc. Even if your Spot instances are interrupted, autoscaling maintains the target capacity by automatically requesting more instances.
The EC2 autoscaling group allows you to expand or shrink the EC2 fleet based on demand and review the scaling activity on the console. You can analyze the reports to see if the scaling policy can be optimized and reduced to the minimum to save costs.
A robust autoscaling solution like Middleware Auto Scaler solves this issue through predictive autoscaling that taps into AI/ML technologies to anticipate resource requirements and match them with the right capacity to run the applications at scale.
Delete unattached EBS volumes
Elastic block storage (EBS) acts as local block storage when you launch an EC2 instance. If you don’t delete these EBS volumes after terminating the instances, they significantly change over time. AWS continues to charge you for these even if you don’t use them. This can result in thousands of unattached EBS volumes that shoot up your bill.
When you launch an instance, check the box in the AWS console to delete the EBS volume when the instance terminates automatically. This ensures you don’t pay for unattached EBS volumes, lowering overall costs.
Adopting Cloud Observability Platform
Middleware’s full-stack observability Platform provides you deeper cost visibility across all your cloud resources. It makes it simple to identify and address cost inefficiencies by automatically surfacing changes in your cloud expenses and visualizing cost data with the rest of your metrics, traces, logs, and other telemetry.
With this comprehensive insight, businesses can optimize resource allocation, eliminate unnecessary assets, and negotiate optimal pricing models, resulting in significant reductions in AWS costs. With Middleware, organizations can achieve a more efficient, cost-effective, and scalable cloud infrastructure that drives business growth and maximizes their AWS investments.
Start monitoring your AWS application to find performance bottlenecks to save upto 40% on your next AWS bill!
For example, if an application uses more resources than it needs, it can be scaled down to reduce costs. Additionally, observability can help identify and track underutilized resources that can be turned off or scaled-down, further reducing costs.
Upgrade instances to the latest generation
AWS regularly releases new generations of instances with better performance, functionality, and cost-effectiveness. You can save costs by updating all instances to the latest generation and ensuring no underperforming ones.
However, this alone won’t help you save much. You need to resize existing older generation instances to smaller versions. This gives you the same level of performance at a lower cost.
Move infrequently-accessed data to lower cost tiers
AWS has many storage tiers. Each tier is priced differently based on the frequency with which the data is accessed. Businesses often make the mistake of preferring S3 storage for all data. This can lead to higher costs.
You can cut costs by moving data that is infrequently accessed to lower tiers. This is an ideal strategy for long-term storage and data backup. Infrequent Access Storage also helps with disaster recovery, whereas with S3 Glacier, you can archive data. This way, you can minimize AWS costs without affecting efficiency.
Use reserved instances (RI)
Another excellent way to reduce AWS costs is purchasing reserved instances (RI) when possible. Cloud management platforms determine if instances are running long enough to justify purchasing reserved instances. Once you determine the need, figure out which RI type is best for you – standard or convertible. Finally, calculate the upfront costs.
Reserved instances also help reduce RDS, Redshift, ElastiCache, and Elasticsearch costs. Compared to on-demand pricing, you get a discount of up to 42% on RIs for a year. Check purchase recommendations for better deals after adjusting parameters for one year, not upfront. The break-even point for this deal is seven to nine months, which is good in the long term.
Think of Architecture upgrades
Modern architecture design, such as multi-cloud computing by leveraging various service providers or hybrid cloud computing by leveraging both on-premise and cloud infrastructure, can help balance your cloud spending.
By partnering with different cloud vendors, such as Azure or Google Cloud, it is possible to leverage a few service-level requirement costs.
Alternatively, repairing already-existing networks, servers, and cooling, power, and supply infrastructure can reduce the price of moving applications to the cloud.
Implement a Cost-Effective AWS Networking Strategy
AWS networking costs can add up quickly, especially if you have a complex network architecture. Implementing a cost-effective networking strategy involves optimizing your network design and selecting the most cost-effective networking options.
To implement a cost-effective networking strategy:
- Analyze your network traffic patterns, including data transfer volumes and network latency requirements.
- Identify any opportunities to optimize your network design, such as consolidating network resources or using AWS Direct Connect.
- Use AWS Network Cost Estimator to estimate your networking costs and identify cost-saving opportunities.
- Consider using Amazon Virtual Private Cloud (VPC) to create a secure and cost-effective network architecture.
Implement Amazon S3 Bucket Policies with VPC Endpoints
By implementing Amazon S3 bucket policies with VPC endpoints, businesses can control access to their S3 buckets and reduce data transfer costs. This setup allows for secure, private connectivity between S3 and EC2 instances, eliminating the need for data to traverse the public internet. As a result, businesses can reduce their data transfer costs and improve security.
Understanding AWS cost optimization tools
Cost Explorer
AWS Cost Explorer is a free service and it can be accessed from the AWS Management Console. It does not require any additional setup or configuration and can be used to monitor costs for multiple accounts and linked accounts.
You can:
- View costs by service, linked account, tag, and more
- Identify and investigate cost drivers
- See the trend of costs over time and forecast future costs
With AWS Cost Explorer, businesses can identify opportunities to convert On-Demand Instances to Reserved Instances, modify existing RIs, or purchase new RIs to match their usage patterns. This can help businesses reduce their AWS costs by up to 75%.
AWS Budgets
AWS Budgets is a cost management tool that allows users to set custom budgets for their AWS costs and usage, and receive notifications when their costs or usage exceed those budgets.
AWS Budgets is a free service, but standard data transfer charges for Amazon SNS notifications apply if you choose to receive notifications via SNS.
AWS Pricing Calculator
The AWS Pricing Calculator is a tool that allows users to estimate the costs of using various AWS services. It allows users to input information about their anticipated usage of each service and provides an estimated cost.
With AWS Pricing Calculator, users can:
- Estimate costs for various services including EC2, S3, RDS, Lambda, and more
- Choose between On-Demand, Reserved and Spot instances
- Compare costs across different regions and availability zones
Sum up: Save your business from the cost trap
Small businesses often struggle with cloud costs and compromise other essential functions to keep paying these bills.
With the strategies mentioned above, you can reduce AWS costs by 40% or more and ensure that business funds are used for something valuable that drives business growth and long-term success.
Middleware can help you save your AWS cost by nearly 40% using its observability solution. Request early access today to manage your cloud costs and restore transparency in the heart of cloud computing.
FAQs
1. How much does AWS cost per month?
The AWS Free Tier offers 12 months of free usage for new AWS customers, with varying limits on services like S3, EC2, and Lambda. After the free tier, pricing varies depending on the services used. The AWS Pricing Calculator can help estimate costs.
2. What are the parts of AWS?
- Compute & Networking (EC2, Lambda, etc.)
- Storage (S3, EBS, etc.)
- Database (RDS, DynamoDB, etc.)
- Security, Identity & Compliance (IAM, Cognito, etc.)
- Analytics (Redshift, QuickSight, etc.)
- Application Services (API Gateway, SQS, etc.)
- Deployment & Management (CloudFormation, OpsWorks, etc.)
3. What are The Four Foundational Services of AWS?
- AWS offers to help companies reduce IT infrastructure costs.
- AWS offers security by protecting data against cyber-attacks.
- AWS offers to maintain Governmental regulatory compliance.
- AWS offers disaster recovery, mainly the amount of data lost and the length of downtime.
4. What are AWS cost optimization free tools?
- Cost Explorer
- AWS Budgets
- AWS Pricing Calculator
5. How does AWS pricing work?
AWS pricing is based on a pay-as-you-go model, where you only pay for the resources you use. Pricing varies depending on the service, region, and usage. Some services offer tiered pricing, while others charge based on usage metrics like hours, bytes, or requests.
6. What is the AWS Free Tier, and what services are included?
The AWS Free Tier provides 12 months of free usage for new AWS customers, with varying limits on services like S3, EC2, Lambda, and more. The free tier includes services like: 750 hours of EC2 usage per month, 5 GB of S3 storage per month, 1 million Lambda invocations per month, and more.
