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With increased technological advancements, organizations are transferring their applications and services to infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and software-as-a-service (SaaS) models. This means a good portion of IT budgets needs to be spent on cloud providers, mainly AWS (Amazon Web Services). AWS cost optimization is significant in specialized fields, covering tools or economic orders. This strategy will help you improve your company’s performance while maintaining agility and quality of service.

This comprehensive blog will explore the best practices for managing AWS cost optimization. We will explore sustainable cloud cost management strategies and unlock significant savings.

What is AWS cost optimization? 

AWS cost optimization includes the value of running systems to deliver cloud value at the lowest price points. It is the world’s top cloud computing platform for providing various services such as computing, storing, networking, and managing databases. AWS cost management basically requires analyzing, using, and recognizing opportunities to decrease costs and implementing actions accordingly.

There are strategies that you can use to decrease costs. Most of Amazon’s services are based on computing resources provided by Elastic Compute Cloud (EC2). This means that expenditure on EC2 is the major factor influencing the overall AWS costs. To this end, you can shift your instances from on-demand pricing to lower-cost spot instances and implement savings plans. Using AI, machine learning, and AWS analytics efficiently can reduce your overall expenses.

Importance of cost optimization in cloud services

Cost optimization in AWS cloud services is important to increase the companies’ profit margins. You need to optimize the costs in AWS because of its various benefits that are mentioned as follows:

• Save costs: The first and most important reason to optimize your costs is to increase the savings portion. You can save more than half of EC2 pricing by using the spot stances. You can save more than half of your expenses using the AWS savings plan.
• Appropriate selection: AWS Cost optimization also streamlines your selection of the right instance type and compute environment. AWS offers recommendations based on various simulations to help you choose the best one for your sites.
• Enhanced flexibility: It also helps you free up the resources to scale the applications more effectively. With more resources, businesses can finance more resources and projects to fulfill customer requirements or enhance current performance.

AWS cost optimization strategies

AWS cost optimization strategies involve using tools and techniques designed to decrease the expense of your cloud services while maintaining the value of their AWS services. The following are the AWS cost optimization strategies:

Interpret your AWS cloud bill: The first step towards building a cost optimization strategy is understanding the AWS cloud bill. The AWS billing optimization dashboard is first introduced in the AWS management console to navigate the potential of AWS cloud expenses. It will review overall expenses and monthly expenditures, with a forecast based on recent use. AWS cost explorer is a tool you can use to analyze spending patterns, specifying the contribution of each service to the bill. Robust knowledge of your bill will help avoid bill shock.

Utilize cost management tools: Some AWS  tools for cost management offer various services to maximize the visibility of cloud expenditure. These tools are crucial for understanding the cloud budget and recognizing the cost-minimizing opportunities. A few AWS cost optimization tools are:

• AWS Budgets can set customer budget alerts when AWS costs and usage exceed the budget amount. This prevents services from exceeding the limits and avoids unwanted charges.
• AWS Cost Explorer provides detailed spending and usage patterns and data analysis that help make smart decisions. It also provides a graphical representation of customer spending, which helps unlock trends, recognize key drivers, and forecast future expenditures.
• AWS Cost Anomaly Detection utilizes machine learning to discover unusual hikes in your spending. It alerts the customers about these changes and addresses issues before they shoot up into the bigger ones.
• AWS cost optimization hub is a central space where you can get suggestions and best practices for decreasing unwanted spending. For instance, it optimizes AWS S3 pricing.

Use Amazon EC2 spot instances: Utilizing the spot instances for faulty workloads can reduce your expenses by 90%. Specific workloads and spot instances are big data processing, containerized applications, CI/CD pipelines, web servers, and development/testing environments. Amazon also provides a feature known as spot fleet, which combines on-demand and spot instances in the auto-scaling group.

Using or selling underutilized instances: Amazon reserved instances allow you to use an instance for one or three years. For using these reserved instances, you need to consider the following options for reducing the expenses on AWS cloud formation:

• If you do not need the RI, you can resell it in the AWS RI marketplace without changing the instance group. Convertible RIs are an exception; you cannot resell them but can change their type and family.
• Regional RIs allow you to shift it to a different zone with an equivalent size and in the same family without guaranteeing capacity. Zonal RIs guarantee capacity without changing zones and instances.
• You can now use RIs for EC2, RDS, Redshift, ElastiCache, and DynamoDB.
• Lastly, you can pay upfront or on an ongoing basis.

Select the right AWS region: The correct AWS region impacts the distance between users, costs, compliance, performance, and services. To compare costs, you can use the AWS pricing calculator. Choosing the region near the users can enhance their experience. Using these services across various regions can enhance your mobile or custom web app’s availability and disaster recovery. Analyze the factors suitable for your project’s needs and then decide accordingly.

Use compute savings plan: The AWS savings plan is an agile pricing model used for saving on EC2, AWS Lambda pricing, and other fragrant tools by deciding a certain level of usage measured in US dollars for 1 to 3 years. All compute instances can have a savings plan besides their size, auto-scaling group, region, or availability zone.

You can use AWS Cost Explorer to create an efficient cost-saving plan. It is very necessary to optimize and manage your Gilas with changes in services. ECO, a cloud optimization tool, can analyze your cloud usage and manage the AWS cost savings plan and the lifecycle of reserved instances. Altogether, this helps maximize discounts in the long term.

Delete idle load balancers and optimize the use of bandwidth: You need to check your elastic load balancing configuration to recognize the idle load balancers. It is a waste of time and money if it has no backend instances of very low traffic.

There is a tool named AWS Trusted Advisor for finding the laid balancers with less than 100 requests in the past seven days. If you have higher data transfer costs, go for Amazon CloudFront pricing, which is a content delivery network that assists in catching web content from multiple destinations, decreasing bandwidth.

Audit underutilized EBS: Auditing your Elastic Black Store regularly is crucial for recognizing and removing storage waste, which increases your AWS expenses. EBS volumes over-presumed or connected to removed EC2 instances can incur changes without any major workload.

By conducting the audits regularly, you can easily right-size your storage design, making sure that you are only dealing with AWS storage pricing that you are really using.

AWS pricing models and how they help optimize costs

There are different AWS pricing models for AWS cost optimizations. You can select the best model according to your needs and requirements. The following are the pricing models:

• On demand pricing: It is the most basic pricing model, which deals where you pay for the services that you are actually using calculated by per hour or second. This is agile but expensive. Organizations start with on-demand AWS server pricing models before shifting to a different one. This suits those who treat expenses as Operating Expenses (OpEx).
• Spot instances: These Amazon EC2 spot instances provide 90% on-demand pricing. They allow you to bid for computing capacity on the marketplace. They are suitable for companies that are managing advanced cloud development skills.
• Reserved instances: You can easily reserve instances for one to three years and get discounts of up to 10 to 75%. This option is best for organizations running existing or legacy enterprise mobile apps on the cloud.
• Savings plans: It is an agile Amazon cloud storage pricing model with up to 72% usage savings. It is totally compatible with organizations that want to maintain agility while avoiding upfront expenses.

AWS Cost Reduction Checklist

For AWS cost optimization, you need a checklist covering the aspects you need to check for cost reduction. The following are the factors included in the checklists:

• Control costs: You need to create a budget plan to guide AWS resource expenditures. The report for cost and usage in the AWS Console can simplify your expenses.
• Optimize storage and other resources: Check the fleet on termination volumes to avoid orphaned volumes. Remove unused waste resources like databases and Elastic IPs; you can also use Amazon S3 clouding (Simple Storage Service).
• Optimize compute instances: Use instances on EC2 or any other service that suits your requirements. Purchase reserved instances, use tragedy instance types, and schedule instances to run only during business hours.

Challenges in AWS cost optimization

In the complex cloud computing, the IT industry faces several AWS cost optimization challenges. The following are the challenges that organizations face by  the AWS services provider:

• Cloud waste: Cloud waste is the cloud sources that are underused or unused when companies overestimate what they require for their business goals. It basically occurs when organizations keep the waste longer than required, buy duplicate cloud services, use more powerful instances than required, or have high Amazon S3 pricing.
• Less performance tracking and benchmarking: Lack of performance web or mobile application testing and benchmarking is one of the major challenges in AWS cost optimization. Due to a lack of performance tracking, there are issues in recognizing the performance problem, increased downtime, and risks for security breaches.
• Lack of organizational cooperation: When operations are not aligned to identify cost-saving opportunities, companies suffer huge losses. Some of the results are unexpected costs, challenging cloud expenses, and poor user experience.
• Inaccurate forecasting: Not creating a proper budget or list of expenditures that you will face in the future is one potential challenge faced by AWS users.

AWS cost optimization is one of the major concerns in IT companies. AWS services are essential for companies to grow as a cloud computing platform. To reduce the expense of these platforms, you need digital marketing that will help you use the AWS platforms more effectively. You can use the AWS cost optimization strategies according to the problem that you are facing in cost optimization.

Fastcurve, as an AWS cloud consulting partner, offers services for effectively optimizing the sewage AWS tools and platforms so that you can store your data securely in an integrated system. Contact them and get to experience the benefits of AWS services.

FAQ: 

What are AWS Savings Plans?

AWS Saving plans are flexible pricing models that allow users to save AWS computing costs by committing to a specific level of utilization over one to three years. EC2 Instance and Compute Savings Plans are two types of AWS savings plans.

What are the best practices for AWS cost management? 

Efficient AWS cost management is essential to control and monitor cloud spending. The following are the best practices:

1. Set budgets and alerts
2. Use the cost explorer.
3. Implement tagging.
4. Use sayings plan and spot instances and auto-scaling
5. Review regularly and optimize

How do you monitor AWS spending?

You can monitor the AWS spending by using various tools, such as AWS Cost Explorer, AWS Budgets, AWS Cost and Usage Reports, Amazon CloudWatch, AWS CloudTrail, and AWS Trusted Advisor.

How does AWS Cost Explorer work?

AWS cost explorer visualizes and analyzes AWS expenses over time. It provides a graphical interface to view your spending patterns through charts and graphs. You can access up to 13 months of historical cost and usage data.