Optimizing your cloud strategy: Proven methods for AWS cost reduction

Cost Optimization

April 12, 2024 • 6 min read

Cloud computing is undergoing inflation, with costs expected to keep rising, resulting in businesses struggling to keep to their monthly budget. It can seem daunting to start tackling daily operational costs and putting an end to underused instances. However, with a strategic approach, you can effortlessly achieve AWS cost reduction with our best practices that are straightforward to implement. They not only keep your AWS cloud bill in check, but these cost reduction tips provide efficiency and visibility into your cloud infrastructure, helping you to simultaneously stay secure and compliant at the same time. There are many ways to save on AWS, let’s find out how. 

Why is AWS cost reduction important?

A proactive approach to AWS cost reduction is essential because, without cost optimization, your costs soon mount and it’s hard to understand why. You can’t be operationally efficient without cost optimization, especially as you manage cloud scalability. When you become distracted, you won’t notice the unattached volumes and costly mistakes without cost analysis, resulting in your overspending every month. Industry analysts anticipate that by 2025, more than half of companies‘ yearly technology expenditures will be allocated to cloud services.  

A keyword to have in mind when considering your cloud cost strategy is allocation. Proper allocation involves aligning resources with actual usage and needs, ensuring that each component contributes effectively to the overall objectives without unnecessary redundancy. By meticulously allocating resources in the AWS environment, businesses not only streamline their operations but also enhance their cost-effectiveness. This meticulous approach allows for better tracking of expenses, pinpointing areas where optimizations can be made. In essence, embracing a mindset of strategic allocation on AWS leads to a more finely tuned and responsive cloud infrastructure. 

Finally, the promotion of cost optimization advocates for a proactive approach to managing infrastructure. Delving into your AWS usage to identify and remove superfluous costs requires a thorough examination. This exploration fosters a heightened comprehension of your workloads and their resource needs, facilitating more knowledgeable decision-making in the realm of infrastructure management. 

Achieving the AWS Well-Architected framework with the cost optimization pillar 

Cost optimization is one of the key pillars of the Well-Architected Framework. This framework is recommended by AWS as a comprehensive guide to building secure, high-performing, resilient, and efficient infrastructure for applications, emphasizing best practices to ensure optimal utilization of resources and cost efficiency throughout the cloud architecture lifecycle. Each of these pillars works hand in hand so as you reduce your AWS costs, you’re helping to drive forward your sustainability at the exact same time, as one example. 

The best practices for AWS cost reduction 

Our cloud experts have helped hundreds of companies better understand their cloud bill, providing the information they need to know how to spend only what they need to. Collating this shared experience, we’ve compiled some easy-to-implement tips that can help you secure some cloud savings quickly for you. 

Analyze your cloud spending over the last few months 

This retrospective examination allows you to identify spending patterns, uncover potential inefficiencies, and implement targeted optimizations to ensure a more cost-effective and streamlined cloud infrastructure. Essentially, it’s hard to know how to reduce your cloud costs if you don’t know how much you’ve been spending. Identify what has spiked spending and why some months seem lower. 

Numerous enterprises find it challenging to grasp the intricacies of the AWS pricing structure, leading to inadvertent overpayment for services beyond their actual usage. So look into what savings plans you’re using and learn about how this is impacting your bill.  

Rightsize your resources 

Ensure that your AWS resources, such as EC2 instances and storage, are appropriately sized to match your actual workload requirements. This prevents over-provisioning and unnecessary expenses. Rightsizing your resources is a pivotal practice in AWS cost optimization, involving a thorough analysis of performance requirements and resource utilization patterns. Leveraging tools such as AWS Trusted Advisor, Cost Explorer, and Compute Optimizer provide actionable insights and recommendations for optimal resource allocation. Employing Auto Scaling groups and considering using Spot Instances enables dynamic adjustments to match varying workload demands, ensuring cost-effectiveness without sacrificing performance. 

Maximize your access control

A big drainer of your AWS budget could be mistakes caused by people with access that they don’t need. Maximizing access control is a crucial cost reduction strategy in AWS, involving meticulous management of permissions and security measures. By implementing the principle of least privilege as part of a zero-trust approach, where users and resources are granted only the minimum access necessary, businesses can mitigate the risk of unauthorized usage and reduce associated costs. Additionally, regularly reviewing and refining access policies ensures that resources are allocated efficiently, preventing unnecessary expenses related to over-permissioned accounts and potential security vulnerabilities.

Utilize Reserved Instances (RIs) 

Take advantage of AWS Reserved Instances to commit to a one or three-year term, which can result in significant cost savings compared to on-demand pricing.

Acquire reserved instances for the suitable duration, and if an instance is not required, avoid retaining it beyond the necessary timeframe. By committing to reserved instances for predetermined periods, businesses lock in lower rates, providing cost predictability and stability. This proactive approach to resource allocation allows for strategic planning and optimal financial management, contributing to overall efficiency in cloud expenditure.

By opting for Reserved Instances (RIs), you have the potential to reduce costs by up to 72% compared to standard On-Demand instance prices, and these RIs are available in two categories: Standard and Convertible, with the latter allowing flexibility to use future instance families at the expense of a slightly smaller discount. Additionally, three payment options—Upfront, Partial Upfront, and No Upfront—are offered for greater flexibility in managing payment preferences.

Choose the right savings plans 

Savings plans are a flexible pricing model offered by Amazon Web Services (AWS) that provides significant cost savings on cloud usage. With savings plans, users commit to a consistent amount of usage (measured in dollars per hour) over a one or three-year term, in exchange for discounted rates on their AWS bills. These plans offer flexibility by allowing users to apply their committed usage across a wide range of AWS services, including EC2 instances, Lambda functions, and more. By leveraging savings plans, businesses can achieve predictable pricing and substantial cost reduction compared to standard on-demand rates, optimizing their cloud strategy and maximizing cost efficiency on AWS.

Monitor and analyze costs 

Take advantage of cloud cost monitoring tools to analyze your spending patterns, identify cost outliers, and gain insights into where optimizations can be made. One example of a cloud cost monitoring tool is StackZone. The software has its very own cloud cost management section where you can:

  • Set up automatic alerts for when your budget is close to being used up 
  • Download cost reports to access historic spending.
  • See recommended actions to optimize your costs and activate these automated changes in one click. 
  • Create a new budget. 
  • See projected spending for the future.
  • Display your expenses on a map, showcasing markers that pinpoint the regions where you have accrued costs. 
  • Enable standardization across your scaling infrastructure preventing costly mistakes. For example, in the event of an error such as misconfiguring the autoscaling group, wherein specific instances are deleted without removing the accompanying EBS volumes, StackZone promptly detects and rectifies this issue. This proactive approach aids in the effective management of your cloud costs by promptly addressing unnecessary charges associated with retained EBS volumes.

Implement tagging

Implementing tagging is a crucial best practice for AWS cost reduction. By assigning meaningful tags to your AWS resources, you create a systematic way to categorize and track costs effectively. These tags act as metadata that provide valuable information about the purpose, owner, or department associated with each resource. This not only enhances resource organization but also allows for more accurate cost allocation. For example, you can tag resources based on projects, teams, or environments, enabling a granular breakdown of costs. This practice not only streamlines financial management but also facilitates better governance, making it easier to understand and control your AWS expenses.

Schedule some off times

Scheduling on/off times for non-production instances is a key AWS cost reduction best practice. By automating the start and stop times of instances used for development, testing, or other non-critical purposes, you ensure resources are only active when needed. This helps significantly lower costs, particularly for instances that don’t require 24/7 availability, contributing to a more efficient and cost-effective cloud infrastructure.

Review and delete unused resources

Regularly review your AWS environment for unused or underutilized resources and decommission them. This prevents unnecessary charges for resources that are no longer contributing to your operations.

Keep optimizing 

Being cost-aware is not a one-time job, you’ll need to continually work towards ensuring your cloud environment is aligned with best practices. Keep an eye on AWS releases to see if there are any new features or services that can help with your cost reduction strategy. 

As you continue to review your monthly AWS bill, you will identify services you no longer use and you can remove these. 

Leverage Spot Instances

Utilize Spot Instances for non-critical, fault-tolerant workloads. Spot Instances can be significantly cheaper than On-Demand Instances, but they come with the risk of termination if the capacity is needed elsewhere.

Implement CloudWatch alarms

Set up CloudWatch alarms to monitor resource usage and trigger actions based on predefined thresholds. This proactive approach helps in identifying and addressing potential cost overruns before they escalate.

Encourage a cost-aware culture across your whole team

Foster a cost-aware culture within your organization by educating teams on AWS cost management practices. Implement policies and procedures that emphasize responsible resource usage and cost-effectiveness.

How much money can I save with an AWS cost reduction strategy?

The amount of money you can save with an AWS cost-reduction strategy depends on various factors, including the size of your infrastructure, usage patterns, and the efficiency of your resource management. It’s always surprising how much you can save monthly when you dedicate time to cloud cost optimization. Users of the AWS cost optimization software, StackZone, achieve 35% cost reductions on average. StackZone automates cloud cost control best practices so you start saving within days of deployment. It ensures your cloud environment is continually configured the way it should be to achieve cost optimization. 

Final thoughts 

By implementing the best practices of AWS cloud cost reduction laid out in this article, through an optimized strategy approach, you can expect your cloud bill to reduce. As businesses continue to harness cloud technologies, the continuous refinement of AWS cost optimization practices is key to achieving sustainable and cost-effective cloud infrastructure. Control your cloud costs today with StackZone, see the console for yourself. 

This article was written by Gastón Silbestein, Co-Founder of StackZone

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