7 Proven Practices And Tools To Cut AWS Cost By 40% Or More (2024)

Looking to reduce your AWS costs? Here are 7 effective AWS cost-cutting techniques, tools, and tips that can help you manage your cloud costs and usage over time.

Amazon Web Services (AWS) is Amazon’s subsidiary that provides on-demand cloud computing platforms and APIs. AWS is metered on a pay-as-you-go basis, where businesses pay based on their requirements.

Businesses often incur much more in public cloud bills than expected. These costs can go up two to three times the planned budget, and the only way to reduce these is to monitor the spending on public cloud services regularly.

In fact, recent reports suggest that firms unknowingly waste up to 35% of cloud spending. As there are many variables influencing AWS cloud costs, let’s differentiate several fundamental service types that ultimately result in AWS cost estimates:

• AWS server type.
• Domain costs.
• Number of servers.
• Data transfer costs.
• Database usage.
• Storage capacity and size.

Calculating AWS costs

Businesses often struggle to understand the AWS pricing system and end up paying for more than they use. Note that in AWS, you pay for what you provision, not what you use. There are also additional services that can increase costs. You need to make sure you provision smartly and check if terminated instances cost you.

The top categories of AWS costs include:

• Compute costs: This includes the cost of running EC2 instances and the cost of using serverless services like Fargate and Lambda.
• Storage costs: This includes the cost of using S3 for object storage, as well as the cost of using services like EBS and EFS for block and file storage.
• Database costs: This includes the cost of using services like DynamoDB, RDS, and ElastiCache for data storage and management.

Other services like Networking costs, Management and Governance costs, Security, Identity, and Compliance costs add up to the overall spending.

The great thing about AWS is that it offers flexibility in services and pricing. This can help you better manage costs and significantly reduce them without affecting the performance and capacity of the service.

1. Analyze the cost allocation. It’s easy to find out AWS’ pricing using AWS Cost Explorer. It helps you view and analyze which AWS services you use and how much they cost.
2. Identify the top accounts with the highest costs using the “monthly costs by linked account” report. Then, find out the services contributing to these costs with the “monthly costs by service” report.
3. You can use the hourly and resource level granularity and tags to identify cost-saving areas.

7 tips to reduce AWS costs

Reducing AWS costs can seem daunting, especially if you don’t have the expertise. Here are seven proven practices to help you cut these costs and make your business more efficient.

Identify Amazon EC2 instances with low CPU utilization and autoscale

Identifying low utilized EC2 instances is a great way to reduce costs. If you provision a 16 GiB memory EC2 instance, you pay for the total capacity, not what you use. Cut down provisioning on such instances, as over-provisioned instances are one of the biggest cost drivers of AWS bills.

Use AWS Cost Explorer Resource Optimization to determine which EC2 instances are idle or underutilized. Stopping or downsizing these instances reduces high costs. You can even use the AWS Instance Scheduler to automatically stop instances or the AWS Operations Conductor to automatically resize them.

AWS Compute Optimizer also gives recommendations for downsizing instance families and instances part of an autoscaling group. This autoscaling feature lets you scale your DynamoDB table in and out. You can also use the on-demand option to avail pay-per-request services that cost less and offer high performance.

With EC2 autoscaling, you can launch Spot instances to meet target capacity. Spot instances can help you cut costs by up to 90% in fault-tolerant workloads like big data, CI/CD, web servers, and so on. Even if your Spot instances are interrupted, autoscaling maintains the target capacity by automatically requesting more instances.

EC2 autoscaling group allows you to expand or shrink the EC2 fleet based on demand and review the scaling activity on the console. You can analyze the reports to see if the scaling policy can be optimized and the minimum reduced to save costs.

A robust autoscaling solution like Middleware Auto Scaler solves this issue through predictive autoscaling that taps into AI/ML technologies to anticipate resource requirements and match them with the right capacity to run the applications at scale.

Delete unattached EBS volumes

Elastic block storage (EBS) acts as local block storage when you launch an EC2 instance. If you don’t delete these EBS volumes after terminating the instances, they significantly change over time. AWS continues to charge you for these even if you don’t use them. This can result in thousands of unattached EBS volumes that shoot up your bill.

When you launch an instance, check the box in the AWS console to automatically delete the EBS volume when the instance terminates. This ensures that you don’t pay for unattached EBS volumes, lowering your overall costs.

Adopting Cloud Observability Platform

Middleware’s Observability Platform provides you deeper cost visibility across all your cloud resources. It makes it simple to identify and address cost inefficiencies by automatically surfacing changes in your cloud expenses and visualizing cost data with the rest of your metrics, traces, logs, and other telemetry.

For example, if an application uses more resources than it needs, it can be scaled down to reduce costs. Additionally, observability can help identify and track underutilized resources that can be turned off or scaled-down, further reducing costs.

Upgrade instances to the latest generation

AWS regularly releases new generations of instances with better performance, functionality, and cost-effectiveness. You can save costs by updating all instances to the latest generation and ensuring no underperforming ones.

However, this alone won’t help you save much. You need to resize existing older generation instances to smaller versions. This gives you the same level of performance at a lower cost.

Move infrequently-accessed data to lower cost tiers

AWS has many storage tiers. Each tier is priced differently based on the frequency with which the data is accessed. Businesses often make the mistake of preferring S3 storage for all data. This can lead to higher costs.

You can cut costs by moving data that is infrequently accessed to lower tiers. This is an ideal strategy for long-term storage and data backup. Infrequent Access Storage also helps with disaster recovery, whereas with S3 Glacier, you can archive data. This way, you can minimize AWS costs without affecting efficiency.

Use reserved instances (RI)

Another excellent way to reduce AWS costs is purchasing reserved instances (RI) when possible. Cloud management platforms determine if instances are running long enough to justify purchasing reserved instances. Once you determine the need, figure out which RI type is best for you – standard or convertible. Finally, calculate the upfront costs.

Reserved instances also help reduce RDS, Redshift, ElastiCache, and Elasticsearch costs. Compared to on-demand pricing, you get a discount of up to 42% on RIs for a year. Check purchase recommendations for better deals after adjusting parameters for one year, not upfront. The break-even point for this deal is seven to nine months, which is good in the long term.

Think of Architecture upgrades

Modern architecture design, such as multi-cloud computing by leveraging various service providers or hybrid cloud computing by leveraging both on-premise and cloud infrastructure, can help balance your cloud spending.

By partnering with different cloud vendors, such as Azure or Google Cloud, it is possible to leverage a few service-level requirement costs.

Alternatively, repairing already-existing networks, servers, and cooling, power, and supply infrastructure can reduce the price of moving applications to the cloud.

Understanding AWS cost optimization tools

Cost Explorer

AWS Cost Explorer is a free service and it can be accessed from the AWS Management Console. It does not require any additional setup or configuration and can be used to monitor costs for multiple accounts and linked accounts.

You can:

• View costs by service, linked account, tag, and more
• Identify and investigate cost drivers
• See the trend of costs over time and forecast future costs

AWS Budgets

AWS Budgets is a cost management tool that allows users to set custom budgets for their AWS costs and usage, and receive notifications when their costs or usage exceed those budgets.

AWS Budgets is a free service, but standard data transfer charges for Amazon SNS notifications apply if you choose to receive notifications via SNS.

AWS Pricing Calculator

The AWS Pricing Calculator is a tool that allows users to estimate the costs of using various AWS services. It allows users to input information about their anticipated usage of each service and provides an estimated cost.

Source:

With AWS Pricing Calculator, users can:

• Estimate costs for various services including EC2, S3, RDS, Lambda, and more
• Choose between On-Demand, Reserved and Spot instances
• Compare costs across different regions and availability zones

Sum up: Save your business from the cost trap

Small businesses often struggle with cloud costs and compromise other essential functions to keep paying these bills.

With the strategies mentioned above, you can reduce AWS costs by 40% or more and ensure that business funds are used for something valuable that drives business growth and long-term success.

Middleware can help you save your AWS cost by nearly 40% using its observability solution. Request early access today to manage your cloud costs and restore transparency in the heart of cloud computing.

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