AWS Costs

AWS Costs: 3 Ways to Save Big and 10 Price Variations to Watch Out For

As organizations move more applications and services to the cloud, and a sizable part of IT budgets are diverted to cloud providers, understanding your cloud bill and how to get the most of your budget on cloud providers like Amazon Web Services, is a prime concern. AWS cost optimization has become a discipline of its own with specialized tools, economic models and best practices.

In this article, you will learn:

Four AWS Pricing Models: Which One is Right for You?

Beyond the basic pay-per-use pricing model, AWS offers three more pricing models that let you give us some flexibility in exchange for significant discounts.

1. On-demand pricing

The basic AWS pricing model is on-demand, with pricing for services based on actual usage, billed per hour or per second (supported for some services). It is highly flexible, but also the most expensive option. Many organizations start with on-demand pricing to understand their cloud needs and later switch to another model.

  • Suitable for organizations that prefer to structure their expenses as Operating Expenses (OpEx) with no up-front payments or time commitment.
  • Suitable for applications that are mission critical or have unpredictable spikes in load.

2. On-demand pricing with Enterprise Discount Program (EDP)


Organizations using on-demand pricing in the long term, should consider applying for an Amazon EDP. An EDP requires you to buy enterprise support and commit to a certain level of spend for a specified period of time. For example, a commitment to spend of $5 million per month may result in a discount of up to 13%. However, you can and should negotiate to receive deeper discounts. You can improve your leverage in the negotiation by, for example, pre-planning and optimizing workloads, and consolidating accounts to show bigger spend.

  • Suitable for organizations that have sizable infrastructure requirements and a large budget to spend on the cloud.
  • Suitable for applications that are large, with stable, predictable demand in the long term (at least when combined with other applications in the same portfolio).

3. Reserved instances


Amazon lets you reserve instances for a period of 1-3 years and receive discounts of up to 75%. In a reserved instance model, if you need to scale down, you cannot get rid of the reserved instances. Scaling up will require consuming resources on-demand at a higher cost. This reduces the flexibility of the Amazon offering, although you can still benefit from the advanced automation options and rich ecosystem of services Amazon provides. 

  • Suitable for organizations that are primarily running existing or legacy enterprise applications on the cloud.
  • Suitable for applications that have predictable usage which can be planned a long time in advance, or have a predictable growth trend.

4. Spot instances


Spot instances are only available for Amazon EC2. They offer the deepest discounts available on Amazon, up to 90% from on-demand instance pricing. Spot instances allow you to bid for spare computing capacity on Amazon’s open market. Pricing may change every five minutes, and if your price bid is above the current market price, you receive the spot instance. The Amazon EC2 Spot service can interrupt your instance if capacity is not available, or the current spot price exceeds your maximum price.

  • Suitable for organizations that have advanced cloud-native development capabilities, with the ability to dynamically cluster, start, stop and migrate applications.
  • Suitable for applications that are stateless and either highly distributed, or run non-time-critical workloads, for example overnight batch processing of analytics data.

Avoiding Surprises in Your Monthly Cloud Bill: 10 Price Variations to Watch Out For

Although there are many tools for estimating your AWS costs, such as official pricing calculator, there may be considerable variation in your actual cloud spend. Below are 13 reasons you may see something different on your Amazon bill compared to your original estimates.

  1. Actual usage—unless you place strict limits on your cloud utilization, actual usage may differ from the usage you estimated.
  2. Different services—in real-life deployments, teams often need to use other or additional AWS services than they originally planned, which may add costs.
  3. Data transfer and throughput costs—it is sometimes difficult to predict how much data your application will transfer, and some Amazon services charge for data transfer or throughput, measured in Input/Output Operations per Second (IOPS).
  4. Region—Amazon services are priced differently in each global region. If you end up running services in a different region than the one you estimated, prices will vary.
  5. Price changes—Amazon constantly updates prices, so if you use services on-demand, there may be unpredictable price movements compared to your estimate.
  6. Taxes—most Amazon calculators do not take into account sales taxes or other government charges related to your Amazon service.
  7. Free tier and promotions—in many cases, part of your initial utilization will use the Amazon free tier, or may be eligible for other discounts, which can reduce your actual costs.
  8. Tiered pricingsome Amazon calculators do not take tiers into account—for example it does not quantify the amount of storage on S3 you choose to move to Amazon Glacier. Check out NetApp’s storage-focused AWS calculator which actually does calculate AWS storage costs according to your use of storage tiers.
  9. Third-party licensing fees—if you purchase software or services on the AWS Marketplace, or directly install commercial software on your instances, these additional license costs may not be reflected in your estimate.
  10. Currency—most calculators show prices in US Dollars, but your actual price may vary depending on your local currency and the current exchange rate.

AWS Cost Optimization: Best Practices for Managing Usage on AWS

Identify Amazon EC2 Instances With Low Utilization

AWS Cost Explorer provides the Resource Optimization report, which shows idle or underutilized EC2 instances. You can reduce costs by stopping these instances or switching them to a smaller instance size. Another option is to automatically stop underutilized instances using the AWS Instance Scheduler, or automate scheduling of instances using AWS Operations Conductor.

The AWS Compute Optimizer provides additional recommendations for EC2 instances. For example, it can suggest how to downsize instances across instance families, or switch to more powerful instances to avoid performance bottlenecks. It can also provide recommendations for efficient use of Auto Scaling groups.

Use or Sell Underutilized Reserved Instances

Reserved Instances can significantly reduce costs on Amazon, but only if you actually use them. If you have idle reservations, it is important to make use of them to avoid losing your investment.

When you discover an unused or underused reserved instance, you can use them for a new application, or an existing application running on more expensive on-demand instances. Otherwise, you can sell your RIs in the Reserved Instance Marketplace.

Use Amazon EC2 Spot Instances to Reduce EC2 Costs

If your workload is fault-tolerant, using Spot Instances can reduce costs by up to 90%. The main caveat is that spot instances can be interrupted at two minutes’ notice. Examples of typical workloads include big data, containerized workloads, CI/CD, web servers, and development/testing. 

Amazon provides the Spot Fleet feature, which lets you run both on-demand and spot instances in the same Auto Scaling group, letting you reserve some on-demand instances which cannot be interrupted, for critical components.

AWS Cost Reduction with Cloud Volumes ONTAP

NetApp Cloud Volumes ONTAP, the leading enterprise-grade storage management solution can do even more to help reduce your overall AWS spending through its powerful storage efficiency technologies, space-efficient snapshots, and zero-cost data cloning. With the thin provisioning, data compression, and deduplication storage efficiencies, companies can reduce storage footprint and costs on AWS by 70% and more.

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Read More About AWS Cost Optimization

AWS cost optimization is a broad topic. Different Amazon services have different pricing models and cost optimization techniques. Read the articles below to gain a deeper understanding of Amazon cost management strategies, with a special focus on storage services and opportunities for optimizing storage costs.

AWS Storage Costs

Amazon provides several popular cloud storage services: Elastic Block Store (EBS), Elastic File System (EFS), Simple Storage Service (S3), S3 Glacier, and more, each with its own pricing model and unique pricing parameters.

Understand storage costs across each of the primary storage services, and see Amazon storage pricing all in one place, with examples covering the most common scenarios. 

Read more: AWS Storage Costs: All in One Place

Controlling EBS Costs

Amazon EBS provides persistent storage for Amazon EC2 instances. However, when you shut down an EC2 instances, the EBS storage volume may be not automatically deleted. This can lead to major cost overages, for example in case you deploy auto scaling and automatically create largen numbers of EC2 instances, but forget to erase their attached EBS volumes when they are no longer needed.

Learn how to find unused EBS volumes and automatically delete them using an AWS Lambda function, to control EBS costs and avoid waste.

Read more: Control EBS Costs: How to Find and Delete Unused AWS EBS Volumes Using a Lambda Function

AWS Cost Saving Guidebook

Learn how to save EBS costs with Cloud Volumes ONTAP, using advanced storage features like deduplication, compression, compaction, thin provisioning, automatic data tiering, NetApp Snapshot™ Copies technology, and smart data clones.

Learn how storage efficiencies can generate major cost savings, and download our complete guidebook to learn how to save more on Amazon EBS.

Read more: AWS Costs Calculator: How to Optimize Your AWS Costs with Cloud Volumes ONTAP

AWS Data Transfer Costs: Hidden Network Transfer Costs and What to Do About Them

AWS and the public cloud in general are based on the premise that cloud-based deployment will be less expensive than operating your own in-house IT. But users frequently open up their monthly cloud bills expecting savings only to find unexpected AWS data transfer costs that seem to have cropped up from nowhere. Where did these hidden network transfer costs come from and what can you do about them?

This article takes a look at the different types of transfers that can be driving up your AWS bill, and gives you some AWS cost optimization tips on how to control AWS data transfer costs, including the use of cost- and space-efficient transfers with NetApp Cloud Volumes ONTAP for AWS.

Read more in AWS Data Transfer Costs: Hidden Network Transfer Costs and What to Do About Them

Want to get started? Try out Cloud Volumes ONTAP today with a 30-day free trial.

See Our Additional Guides on Key IaaS Topics

We have authored in-depth guides on several other topics that can also be useful as you explore the world of IaaS.

Cloud Migration

Learn about cloud migration and what major challenges to expect when implementing a cloud migration strategy in your organization. 

See top articles in our cloud migration strategy guide:

AWS High Availability

Discover how high available systems are reliable and resilient and see how AWS can help you achieve high availability for cloud workloads, across 3 dimensions.

See top articles in our AWS high availability guide:

AWS Migration

Learn about Amazon’s basic framework for migration, and how to plan for common challenges that affect almost every migration project.

See top articles in our AWS migration guide:

Azure Cost Management

Learn about tools and practices that can help you manage and optimize costs on the Microsoft Azure cloud.

See top articles in our Azure cost management:

AWS EBS

Learn what is AWS EBS and how to perform common EBS operations. Including five highly useful EBS features that can help you optimize performance and billing. 

See top articles in our guide to AWS EBS:

AWS EFS

Learn about AWS EFS, your backup options, how to optimize performance, see a brief comparison of EFS vs EBS vs S3, and discover how Cloud Volumes ONTAP can help.

See top articles in our guide to AWS EFS:

Azure Migration

Learn about aspects of considerations when implementing Azure migration: migration models, state assessment, storage configuration, security, and maintenance. 

See top articles in our Azure migration guide:

Azure High Availability

High availability is one of the major benefits of cloud services. The guarantee that your data will remain accessible is critical to supporting high priority workloads and applications and is the reason many move to the cloud in the first place.

This guide explains what high availability is and how to optimize Azure high availability.

See top articles in our Azure high availability guide:

Linux on Azure

Learn how to use Linux on Azure, including guides for cloud-based enterprise Linux deployments and performance tips.

See top articles in our guide to Linux on Azure:

HPC on Azure

Discover services and techniques for cloud-based HPC, including unique Azure HPC features and use cases. 

See top articles in our guide to HPC on Azure:

SAP on Azure

Learn about all SAP solutions offered as a service on Azure, including HANA, S/4HANA, NetWeaver and Hybris, migration considerations and best practices.

See top articles in our guide to SAP on Azure:

VDI on Azure

Learn what options are available for VDI on Azure. Understand how the architecture works and discover best practices for VDI deployments.

See top articles in our guide to VDI on Azure:

AWS Big Data

Learn about the tools AWS provides for building big data infrastructure, including data lakes and big data analytics systems.

See top articles in our guide on AWS Big Data:

Google Cloud Migration

Learn how to migrate your workloads and data to Google Cloud, including in-depth comparisons between GCP and other cloud providers, tools, strategies, costs, and more.

See top articles in our guide on Google Cloud migration:

 

 

Yifat Perry, Product Marketing Lead

Product Marketing Lead

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