5 Proven Practices to Reduce AWS Cost by 40% or More

middleware team

MW Team

October 11, 2021

5 Proven Practices to Reduce AWS Cost by 40% or More

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Amazon Web Services or AWS is Amazon’s subsidiary that provides on-demand cloud computing platforms and APIs to businesses, governments, or individuals. AWS is available on a metered pay-as-you-go basis and companies can keep paying based on their requirements.

Surveys have proved that businesses often end up paying much more in public cloud bills than they have anticipated. This cost can go up two to three times higher than their planned budget. The only way to reduce this is to minimize AWS costs and save some money on a regular basis.

Often, businesses do not understand the pricing system of AWS and end up paying for more than they use. It is important to note that in AWS, you pay for what you provision, not what you use. Along with it come the additional services that might increase costs. You have to make sure you provision smartly and check if terminated instances are still costing you money.

The plus point with AWS is that it offers flexibility in services and pricing options. This can help you manage costs better and reduce them by 40% or more without compromising on the performance and capacity of the service.

The basic approach to reduce AWS cost remains the same as any. You must have clarity on the usage and costs of services, perform cost optimization activities, understand where to save money, and modify your practices accordingly. However, there are other tactical approaches that can help you reduce AWS costs without impacting business functions. 

It is easy to find out the prices of the AWS services you are using, you can use the AWS Cost Explorer to view and analyze which AWS services you are using and how much it is costing you. 

First, identify the top accounts with the highest costs using the “Monthly costs by linked account” report. Then, identify the services contributing to these costs by using the “Monthly costs by service” report. Next, you can use the hourly and resource level granularity and tags to identify cost-saving areas. 

5 Strategies to Reduce AWS Costs

Apart from this, here are 5 proven practices that can reduce AWS cost by 40% or more for your business.

Identify Amazon EC2 Instances with Low-Utilization and Reduce Cost by Implementing Autoscaling

Identifying EC2 instances with low utilization is a great way to reduce costs. If you provision an EC2 instance with 16 GiB memory, you have to pay for the entire capacity and not what you use. Cut down on provisioning in these instances to reduce costs as over-provisioned instances are one of the biggest cost drivers in AWS bills.

You can use AWS Cost Explorer Resource Optimization to get an insight into which EC2 instances are idle or less utilized. By stopping or downsizing these instances, you can reduce costs significantly. You can even use the AWS Instance Scheduler to automatically stop instances or the AWS Operations Conductor to automatically resize EC2 instances.

AWS Compute Optimizer also gives recommendations about downsizing instance families and instances that are a part of an Autoscaling group. the Autoscaling feature lets you scale in and out your DynamoDB table. You can also use the on-demand option to avail pay-per-request services, which cost less and give high performance.

EC2 Autoscaling also lets you launch Spot instances to meet target capacity. Spot instances can help you reduce 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 requesting more Spot instances automatically. 

An 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 the minimum can be reduced to cut costs.

Middleware’s autoscaling can help solve this issue through its predictive autoscaling that taps into AI/ML technologies to foresee resource requirements and match them with the right capacity to run the applications at scale.

Delete Unattached EBS Volumes

An Elastic Block Storage (EBS) acts as the local block storage when you launch an EC2 instance. If you do not delete these EBS volumes after the instances are terminated, over time they can accumulate significant changes. AWS will continue to charge you for these even if you do not use them. This can lead to 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 automatically when the instance is terminated. This will ensure that you do not have to pay for unattached EBS volumes and your overall cost will go down.

Upgrade Instances to the Latest Generation

AWS regularly releases new generations of instances that have better performance, functionality, and cost-effectiveness. You can save costs by updating all instances to the latest generation and ensuring you have no underperforming instances.

However, this alone won’t help you save much. Additionally, you will need to resize existing instances belonging to the older generation to smaller sizes. This will help you get the same level of performance at lower costs.

Move Infrequently-Accessed Data to Lower Cost Tiers

There are many storage tiers available with AWS. Each tier of storage has different price points, based on the frequency at which the data is accessed. Often, businesses make the mistake of preferring S3 storage for all data. This can lead to higher costs.

You can cut costs by moving infrequently accessed data to lower tiers. This is an ideal strategy for the long-term storage and backup of data. Infrequent Access Storage also aids in disaster recovery, whereas you can use Glacier to archive data. This way, AWS costs can be minimized without affecting efficiency.

Use Reserved Instances (RI) to Reduce Cost

A great way to reduce AWS costs is by purchasing Reserved Instances when possible. Cloud management platforms will help you to determine if instances are running long enough to justify purchasing Reserved Instances. Once you determine the need, you have to figure out which RI type is best for you, Standard or Convertible. Then, you must determine the amount to be paid upfront.

Reserved Instances also help to reduce RDS, Redshift, ElastiCache, and Elasticsearch costs. Compared to on-demand pricing, you get a discount of up to 42% on RIs for one year. Check purchase recommendations for better deals after adjusting parameters to one year, no upfront. The break-even point for this deal is seven to nine months, which is a good enough option for the long term.


Smaller companies often struggle with their cloud costs and have to compromise on other important functions to keep paying these bills. With these five proven strategies, you can reduce AWS cost by 40% or more and ensure that the business funds are used for something of added value that leads to company growth and long-term sustenance.

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