What is AWS Cost Optimization?
AWS cost optimization is a strategic process that helps you manage your Amazon Web Services (AWS) costs better. It’s about understanding where your money is going so that you can make the most informed decisions about how to allocate resources and reduce unnecessary expenses. AWS cost optimization isn’t just about cutting costs—it’s about efficiently using your AWS resources to maximize value.
AWS charges based on usage, meaning the more resources you use, the more you pay. However, the beauty of AWS is that you only pay for what you use—there are no upfront costs or long-term commitments. However, if you’re not careful, your costs can quickly spiral out of control. That’s where AWS cost optimization comes in.
Implementing AWS cost optimization strategies can help you avoid unnecessary costs, use your resources more effectively, and get a better return on your AWS investment. It’s a crucial part of managing your AWS environment and can make a significant difference in your overall cloud computing costs.
Leveraging AWS Cost Management Tools
AWS provides several free tools you can use to manage and reduce your cloud costs:
AWS Cost Explorer: Gaining Insights into Expenditure
AWS Cost Explorer is a user-friendly interface that provides detailed information about your AWS costs. With Cost Explorer, you can view your AWS cost data up to the last 13 months, forecast how much you’re likely to spend in the next three months, and get recommendations for cost optimization.
Cost Explorer provides a set of default reports that you can use to understand your costs quickly. For example, there’s a daily cost report, a monthly cost report, and a report that shows your costs by service. Plus, you can create custom reports to suit your specific needs. Cost Explorer’s visualization tools also make it easy to analyze your cost trends over time.
By using AWS Cost Explorer, you can gain valuable insights into your AWS expenditure, identify patterns, and uncover potential cost-saving opportunities. It’s a must-have tool for anyone serious about AWS cost optimization.
AWS Budgets: Setting and Monitoring Budgets
Another important AWS cost management tool is AWS Budgets. This tool allows you to set custom cost and usage budgets that alert you when your costs or usage exceed (or are forecasted to exceed) your budgeted amount.
With AWS Budgets, you can create daily, monthly, quarterly, or annual budgets. You can also create budgets for specific services or linked accounts. Once you’ve set up your budgets, AWS Budgets will send you email or SMS notifications whenever your usage or costs exceed your budget thresholds.
AWS Budgets is a proactive way to manage your AWS costs. By setting and monitoring budgets, you can keep track of your costs and usage, hold yourself accountable, and avoid any surprises when your AWS bill arrives.
AWS Trusted Advisor: Following Best Practices for Cost Savings
AWS Trusted Advisor is another invaluable tool for AWS cost optimization. It’s an online resource that helps you follow best practices to optimize your AWS environment. Trusted Advisor provides real-time guidance to help you provision your resources following AWS best practices.
Trusted Advisor checks your AWS environment and provides recommendations in five categories: cost optimization, performance, security, fault tolerance, and service limits. The cost optimization checks can help you identify opportunities to save money, such as identifying idle and underutilized resources.
By following the recommendations of AWS Trusted Advisor, you can not only reduce your AWS costs but also improve the performance and security of your AWS environment.
AWS Cost and Usage Report: Analyzing Detailed Cost Data
AWS Cost and Usage Report (CUR) is the most comprehensive source of AWS cost and usage data. It provides detailed information about your AWS costs, including the usage, cost, and efficiency of your AWS resources.
The CUR contains more than twenty reports, each of which provides a different view of your AWS usage and costs. You can use these reports to analyze your AWS costs at a granular level, understand your cost drivers and usage trends, and make data-driven decisions about resource allocation and cost management.
Using the AWS Cost and Usage Report, you can identify the areas where you’re spending the most and find opportunities to reduce your costs. It’s a critical tool for anyone looking to do a deep dive into their AWS cost data.
Implementing Effective Storage Strategies
Deleting Unused EBS Volumes and Snapshots
One of the most effective ways to optimize your AWS costs is by implementing effective storage strategies. This starts with deleting unused Elastic Block Store (EBS) volumes and snapshots.
EBS volumes and snapshots are persistent block storage services for Amazon EC2 instances. They provide high performance for workloads that require frequent and rapid access to their data. However, they also come with a cost. If you’re not using certain EBS volumes or snapshots, you’re essentially paying for storage that you don’t need.
By regularly reviewing and deleting unused EBS volumes and snapshots, you can significantly reduce your AWS storage costs. Just make sure that you’re not deleting anything important—once a volume or snapshot is deleted, there’s no way to recover it.
Cleaning Up Old Data in S3 Buckets
Another storage strategy for AWS cost optimization is cleaning up old data in your S3 buckets. Amazon S3 is an object storage service that offers industry-leading scalability, data availability, security, and performance.
However, just like with EBS volumes and snapshots, you pay for the storage you use in S3. If you’re storing old, unneeded data in your S3 buckets, you’re wasting money. By regularly reviewing your S3 buckets and deleting old data that you no longer need, you can optimize your S3 costs.
Keep in mind that deleting data from S3 is permanent. Make sure to backup any data that you may need in the future before deleting it.
Transitioning S3 Objects to Cheaper Storage Classes
Lastly, you can save on your AWS storage costs by transitioning your S3 objects to cheaper storage classes. Amazon S3 offers several storage classes, each with its own pricing model. Some storage classes, like S3 Standard, are designed for frequently accessed data, while others, like S3 Glacier and S3 Glacier Deep Archive, are designed for long-term archiving.
By understanding your data access patterns and transitioning your S3 objects to the most cost-effective storage class, you can optimize your S3 costs. Just remember that each storage class has its own retrieval costs and minimum storage duration charges, so make sure to choose the storage class that best fits your needs.
Optimizing Compute Resources
Rightsizing EC2 Instances Based on Load
Amazon Elastic Compute Cloud (EC2) is a central part of AWS’s cloud-computing platform. It provides secure, resizable compute capacity in the cloud, but it can also account for a significant part of your AWS bill if not managed properly. Rightsizing your EC2 instances is a key aspect of AWS cost optimization.
Rightsizing involves selecting the most cost-effective instance to meet your application’s performance needs. This process starts with understanding the workload of your EC2 instances. AWS offers tools like Cost Explorer and Trusted Advisor that can help you monitor and analyze your instance usage. By reviewing these data, you can identify underutilized instances and downgrade them to a less expensive model, or even shut them down if they’re not needed.
Using Spot Instances for Temporary, Flexible Workloads
Another way to optimize your AWS compute resources is by using Spot Instances. Spot Instances are unused EC2 instances that AWS sells at a significant discount—up to 90% off the regular price. They are ideal for temporary, flexible workloads that can withstand interruptions.
One of the key benefits of Spot Instances is their cost-effectiveness. Because you are essentially bidding on unused capacity, you can often get compute power at a fraction of the cost of On-Demand Instances. However, it’s important to be aware that Spot Instances are not guaranteed. If AWS needs the capacity back, your Spot Instance can be terminated with little notice.
Despite this, Spot Instances can be an excellent part of your AWS cost optimization strategy if used correctly. They are ideal for non-critical tasks that can be interrupted, such as data analysis, batch jobs, or background processing. By offloading these types of tasks to Spot Instances, you can reduce your AWS costs significantly.
Implementing Auto Scaling to Adjust Resources Dynamically
Auto Scaling is another powerful tool for AWS cost optimization. It allows you to adjust your compute resources dynamically based on demand, ensuring that you have just the right amount of capacity to handle your workloads.
With Auto Scaling, you set policies that dictate when to automatically add or remove EC2 instances. These policies can be based on a schedule (for predictable load changes), or on demand (for unpredictable load changes). By adjusting your resources in real-time, you can ensure that you’re not paying for idle capacity or sacrificing performance due to a lack of resources.
Implementing Auto Scaling is not only about cost savings. It can also improve your application’s performance and availability. By automatically adjusting your resources based on demand, Auto Scaling can help your application cope with unexpected traffic spikes, ensuring a smooth user experience.
Taking Advantage of Reserved Instances (RIs) and Savings Plans
Buying RIs for Predictable Workloads
If your AWS usage is predictable and consistent, Reserved Instances (RIs) can offer significant cost savings. RIs are a commitment to use a specific instance type for a set period, usually one or three years. In exchange for this commitment, AWS offers a substantial discount compared to On-Demand pricing.
When you purchase a Reserved Instance, you are not reserving a specific instance. Instead, you’re committing to use a certain amount of compute capacity. If your usage exceeds this capacity, you’ll be charged the On-Demand rate for the excess usage. On the other hand, if you underutilize the Reserved Instance, you’re still responsible for the full cost.
Choosing the right RI for your needs can be complex, but AWS offers tools to help. The AWS Cost Explorer can provide recommendations based on your past usage, and the RI Utilization report can help you track your RI usage over time.
Monitoring and Modifying RIs using the RI Utilization Report
To maximize the benefits of Reserved Instances, it’s crucial to monitor their usage regularly. This is where the RI Utilization Report comes in. This report provides detailed information about your RI usage and helps identify potential cost savings.
The RI Utilization Report tracks the percentage of your RIs that are being used, and how much of their total potential value you’re getting. If you’re consistently underutilizing your RIs, it may be time to modify your RI strategy.
Modifying your RIs can be a cost-effective way to better align your RI purchases with your actual usage. AWS allows you to exchange one type of RI for another, change the availability zone of an RI, or even sell unused RIs in the AWS Marketplace.
Exploring Savings Plans for Consistent Workloads over Time
If you have consistent workloads over time but need more flexibility than Reserved Instances offer, Savings Plans could be an excellent option. Savings Plans is a flexible pricing model that offers significant discounts in exchange for a commitment to a consistent amount of usage (measured in $/hour) for a one or three-year term.
There are two types of Savings Plans: Compute Savings Plans, which apply to any EC2 instance regardless of region or family, and EC2 Instance Savings Plans, which apply to a specific instance family within a region.
Like with Reserved Instances, the key to maximizing Savings Plans is understanding your usage patterns and regularly reviewing your Savings Plans commitments. AWS provides tools like the AWS Cost Explorer to help you analyze your usage and make informed decisions.
Conclusion
In summary, AWS cost optimization is a continuous process that involves rightsizing your resources, taking advantage of Spot Instances and Auto Scaling, and leveraging the cost savings of Reserved Instances and Savings Plans. By implementing these strategies, you can ensure that you’re getting the most value out of your AWS investment.
Author Bio: Gilad David Maayan
Gilad David Maayan is a technology writer who has worked with over 150 technology companies including SAP, Imperva, Samsung NEXT, NetApp and Check Point, producing technical and thought leadership content that elucidates technical solutions for developers and IT leadership. Today he heads Agile SEO, the leading marketing agency in the technology industry.
