This blog discusses proven AWS cost reduction strategies and effective best practices.

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, where businesses pay based on their requirements.

Businesses often incur much more in public cloud bills than expected. These costs can go up two to three times the planned budget, and the only way to reduce these is to regularly monitor the spending on public cloud services.

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Calculating AWS costs

Businesses often struggle to understand 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. There are also additional services that can increase costs. You need to make sure you provision smartly and check if terminated instances cost you.

The great thing about AWS is that it offers flexibility in services and pricing. This can help you better manage costs and significantly reduce them without affecting the performance and capacity of the service.

The basic approach to reducing AWS costs is the same as any other cost-saving approach. You need clarity on the usage and costs of services, perform cost optimization, understand where to save money, and adjust your practices accordingly. However, there are other tactical approaches to help you reduce AWS costs without affecting business functions. 

First, 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.

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

5 strategies to reduce AWS costs

Reducing AWS costs can seem daunting, especially if you don’t have the expertise. Here are five 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 automatically resize them.

AWS Compute Optimizer also gives recommendations for downsizing instance families and instances 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 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, and so on. Even if your Spot instances are interrupted, autoscaling maintains the target capacity by automatically requesting more instances.

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 reduced to save costs.


Auto Scaling Your Application Infrastructure

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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 automatically delete the EBS volume when the instance terminates. This ensures that you don’t pay for unattached EBS volumes, lowering your overall 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.

Save your business from the cost trap

Small businesses often struggle with cloud costs and compromise other important 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 60% using it’s AI-powered Autoscaling solution. Request early access today to get competitive advantage over others!