AWS is a popular option for startups and enterprises that need cloud services. Its notable flexibility is what makes it possible to get results more quickly. Yet, it’s also pretty unpredictable, and it’s easy to waste your money.
You need a proper AWS spend optimization strategy to avoid this. Keep reading and learn about the top optimization methods and how much you can save with their help!
About AWS Cost Optimization
AWS cost optimization is the strategic and continuous process of controlling and minimizing cloud infrastructure expenses.
Amazon Web Services has a flexible and multi-faceted pricing model that gives you more control. You get to determine sectors to reduce waste and rightsize resources.
On average, businesses can save 20% to 40% on their monthly AWS bills with an appropriate optimization strategy.
You should consider implementing AWS spend optimization for
- Unpredictable growth of bills,
- Underused instances,
- Scaling or cloud migration tasks,
- Strict budgets or priorities change,
- Intelligent cost management.
Spend optimization tools also help you create accurate cloud expenses reports. This approach enables you to manage your cloud environment with greater precision and efficiency.
AWS Pricing Models
AWS provides versatile pricing models for businesses of all sizes. Understanding the specifics of each choice is essential for fair resource control and AWS cost optimization.
Here are the main options they propose.
On-Demand Pricing
On-Demand pricing is their most direct structure. Billing is based on how long the computing power or database environment is operating.
This model works great for
- Apps with unpredictable operations,
- Temporary tasks,
- Development and testing environments.
Yet, it’s typically the priciest option per unit of usage.
Reserved Instances
Reserved Instances allow enterprises to buy reserved capacity with multi-year terms at a significant discount. Your potential savings will be around 75% compared to On-Demand prices.
You can optimize the cloud allocations and control by reserving distinct instance types.
RIs are perfect for apps with consistent use patterns and extended operational demands.
Savings Plans
Savings Plans provide even more greater flexibility than Reserved Instances (RIs). This new pricing model offers up to 72% savings over the first one.
There are two kinds of these plans:
- Compute Savings Plans
- EC2 Instance Savings Plans
These alternatives adapt more easily to changing workloads. So, they are a great choice if you need scalable AWS cloud cost optimization tactics.
Spot Instances
Businesses can leverage Spot Instances to gain access to a substantial amount of extra EC2 capacity, achieving savings of up to 90% compared to the standard price of On-Demand instances. However, AWS can reclaim these instances. So, it’s not suitable for every workload.
It’s a good alternative for
- Stateless software,
- Compute batch tasks,
- Big data analysis.
Spot Instances are a wise pick for companies that want to reduce expenses on workloads that don’t demand high availability.
Also Read: Cloud Cost Optimization Strategies for Businesses
AWS Spend Optimization Methods
Spending optimization is essential for any company that wants to support profitability and steady development. Here are some AWS cost optimization recommendations to help you handle this process.
Rightsize Resources
Rightsizing involves adjusting underutilized and oversized cloud resources to accurately match your actual needs.
AWS offers some tools for rightsizing, including
- Compute Optimizer,
- Trusted Advisor,
- Custom scripts.
This practice should be a continuous process. We suggest you automate it and incorporate it into regular operations.
Use the Right Pricing Model
As you already know, AWS offers diverse pricing models. Choosing the most appropriate model is absolutely essential for achieving substantial cost reductions.
For example, Canva had built its platform on AWS from the beginning. They used a mix of purchase models to get a stronger outcome, including
- Reserved Instances,
- Spot Instances,
- On-Demand Instances.
As a result, Canva achieved a 46% reduction in compute costs in under two years.
Use AWS Cost Management Tools
You need to know where your money is going if you want to control AWS spending. The platform has diverse tools to help you manage expenditures, like
- Cost Explorer,
- Budgets,
- Cost and Usage Reports,
- Cost Anomaly Detection.
Establish a FinOps Culture
FinOps is a framework that facilitates ongoing and collaborative cross-functional alignment on cloud financial management. The main principles of this framework are
- Shared ownership of cloud usage,
- Timely feedback loops,
- Decentralized decisions.
This culture encourages transparency and financial responsibility. It leads to smarter decisions and stronger cost controls at every level.
Implement Governance and Automation
Governance and automation are essential elements of handling cloud spend.
Governance guarantees that all the guidelines are in place. Automation executes those policies consistently. They include
- Access controls and budget segmentation,
- Auto-scaling,
- Resource tagging,
- Lifecycle policies.
These practices lessen human error and improve performance.
Conclusion
AWS cost optimization allows businesses to use the cloud more efficiently and minimize budget waste. The platform has diverse instruments and pricing models that can help you save 20-40% on your bills.
You need a proper optimization plan to achieve considerable savings. It should include these activities
- Resource rightsizing,
- Combination of pricing models,
- Finops culture,
- Governance and automation.
Hope that you found our guide useful!
