Choosing an AWS cost management strategy

Taking the first step

Introduction

Cost management and optimization in the cloud are important for businesses of all sizes. An effective cost management strategy ensures that you only pay for what you need and that you maximize the return on your cloud investment.

With cloud services, costs are dynamic and can escalate if not monitored closely. Financial planning, coupled with a clear understanding of the cost models for each service that you use, lets you allocate resources strategically, aligning spending with your business goals. This includes choosing the right pricing models, such as pay-as-you-go or reserved instances, and using auto-scaling to match resource provisioning with actual demand.

We offer services and tools to help you with cost management and optimization, including resources to organize and track your cost and usage data, improve control (through consolidated billing and access permission), enable better planning (through budgeting and forecasts), and further lower your costs by making use of the right resources and pricing optimizations.

This decision guide will help you ask the right questions, evaluate your criteria, and determine which cost management services and tools are the best fit for your needs.

Understand

AWS cost management strategy can be broken down to several key areas:

Plan and evaluate: When planning for future cloud spend, start by defining your key performance indicators (KPIs), such as the monthly cost of a specific project. Make sure that cloud resources related to a project are properly tagged with cost allocation tags, cost categories, or both. Then, calculate and track the monthly cost of the project with the cost and usage data available in your AWS Cost Explorer and AWS Cost and Usage Report.

Decide the project budget based on the trend shown by your KPIs, as well as the available funds set aside for the project, and set the budget thresholds using AWS Budgets for cost or resource usage.

Manage and control: As your organization evolves, you need the freedom to experiment and innovate in the cloud, while maintaining control over cost, governance, and security. One way to do that is to establish centralized ownership through a center of excellence or cloud business team. While elements of cost management are shared responsibilities across the entire organization, a centralized team can design policies and governance mechanisms, implement and monitor the effort, and help drive best practices.

This team can be supported by services such as AWS Identity and Access Management (IAM) and AWS Organizations.

Use the AWS Billing Console to track your overall spend, and to view your cost breakdown by service and by account on your billing dashboard.

Track and allocate: Tracking spending and allocating that spending to the right team can be vital to effective cost optimization. It's useful to know when you're spending more than you planned, but even more useful when you can clearly identify where that spending is happening. We offer several tools to help you get started.

AWS Cost Explorer (when paired with Cost Allocation Tags) lets you categorize your resources and spending to fit your organization’s needs, while AWS Billing Conductor lets you customize your pricing and billing report to aligns with your business logic. AWS Application Cost Profiler lets you collect and correlate your tenant usage data with your AWS billing information and generate a tenant-specific report with hourly granularity on a daily or monthly basis, or both.

Optimize and save: Cost optimization is about making sure that you pay only for what you need. Two of the more useful strategies for optimizing spending are:

Focus on these four areas to manage your AWS costs more effectively, maintain financial control, and optimize your cloud operations for maximum efficiency and value.

Consider

The following section outlines some of the key criteria to consider when choosing a cost management strategy, as well as supporting tools and services.

Choose

Now that you know the criteria by which you will be evaluating your cost management options, you are ready to choose which AWS cost management service may be a good fit for your organizational requirements.

The following table highlights which services are optimized for which circumstances. Use the table to help determine the service that is the best fit for your organization and use case.

Use

You should now have a clear understanding of what each AWS cost management service (and the supporting AWS tools and services) does—and which might be right for you.

To explore how to use and learn more about each of the available AWS cost management services, we have provided a pathway to explore how each of the services work. The following section provides links to in-depth documentation, hands-on tutorials, and resources to get you started.

Explore