The hidden costs of cloud computing: Revealing 8 unexpected expenses

Cost Optimization

July 19, 2023 • 6 min read

The hidden costs of cloud computing are a pain point and huge frustration that many of our clients express in their first contact with our team. With new technological innovations entering our business operations regularly, we rely on the cloud more. How many times have you opened your cloud bill with complete shock and confusion, finding items you’ve not heard of that you’re being billed for? You think “how much?” With cloud costs spiraling, they suddenly seem out of control. Our team made up of AWS cloud experts understands this. This is why we created this article; we will explain why the cloud can feel so expensive, define the hidden costs of cloud computing, and provide advice on how you can effectively manage your cloud environment to generate cost optimization opportunities. 

How does AWS billing work?

Essentially, you’re paying for what you use each month; it’s a pay-as-you-go model. This can make tracking the cost of cloud computing more complicated as you’re not paying the same amount each month. It’s up to you to understand what causes a change in price. 

What does the AWS cloud bill contain? 

Your monthly AWS bill will detail exactly how much you’ve spent, in each region and each account. This can include but it’s not limited to: 

  • Any AWS saving plans or Reserved Instances you purchased – these are pre-agreed special discounts where you commit to a consistent amount of usage 
  • Data transfer costs – you are charged for any data transfers that are transmitted through the internet. These are subject to region-specific and tiered rates. When it comes to inter-region data transfers, the fees are based on the rates set by the source region. In the case of data transfers between AWS Regions and Direct Connect locations, there are no charges for transferring data into any AWS Regions from the internet, following the general rule of free data transfer into AWS. However, there is a cost associated with transferring data from an AWS Region to a Direct Connect location.
  • Storage costs – For different storage resources such as Amazon S3, Amazon EBS, etc. you will be charged per gigabyte, stored in the AWS cloud per month.
  • Compute – For different compute resources such as EC2 instances, Lambda, etc. you will be charged per hour. Pre-agreed special pricing models are available for these instances such as Saving Plans, Reservations, etc.
  • Free tiers for certain services – The purpose of AWS free tiers is to allow you to try various services, completely free, for a specified limit. Once you reach and go above that limit, you will be billed so watch out! AWS free tiers come in two different models: the 12-month free tier and the always-free offer. It’s important to know when your free tier will run out to prevent a surprise cost. 

 It’s easy to see why so many people find themselves struggling to understand their AWS cloud bill. The pricing is determined in advance, but the requirements of the workload may vary over time. It is important to regularly evaluate and address any discrepancies between the size of the infrastructure and the actual usage.

The hidden costs of cloud computing: The 8 unexpected reasons why your cloud bill is higher than usual 

Here are the main reasons behind the surprising cloud bills that we see with our clients’ AWS cloud usage when they first reach out to us. 

1. The cost of cloud migration 

Cloud migrations are rarely simple when completed manually. Costs begin to mount when mistakes are made; they partly pay for the needed resource to finish the project way after the initial deadline. Getting a cloud migration correct sometimes requires the expertise of a new hire or external consultancy. There’s also the cost of data transfers, infrastructure set up, and the configurations needed to ensure the cloud infrastructure is correct for your needs. 

2. Zombie infrastructure

Zombie infrastructure in the cloud relates to the underutilization of cloud resources. In simple terms, you’re paying for more than what you need, creating cloud waste. We recommend you to establish complete cloud visibility. You can identify low data usage by closely monitoring your bandwidth,  CPU usage, and I/O. This information empowers you to choose the best options such as shutting or scaling down. 

The main culprit: EBS volumes 

CRO of StackZone, Gaston Silbestein describes: “When you deploy an Ec2 instance, you need to attach an EBS volume to it. They go hand in hand. Therefore, when you terminate the instance, the EBS volume will continue to be active unless you define it to be deleted with the instance in the EC2 configuration. This means that if you don’t delete the EBS volume, you will continue to be charged.”

3. Forgotten instances

If you have forgotten to stop an instance that you don’t need, AWS will continually charge you until you manually stop it. This is why, and we can’t express this enough, you need full visibility into your cloud usage at all times. 

Snapshots of deleted volumes that are still present are referred to as “orphaned snapshots,” and keeping these snapshots can lead to unnecessary costs accumulating.

4. Buckets

AWS Buckets are compulsory; you need them within one of your AWS regions before you can uphold data. Generally, they’re quite affordable, some only costing a few dollars here and there. They provide the benefits of scalability, data availability, security (they have in-built security features) and flexible access controls. But here’s the catch: you’re able to have up to 100 buckets in your account. So that $2 a-day bucket and $9 a-day bucket, with the other ones, can soon make your cloud expenditure climb. A lack of understanding for how many you have, will soon increase your cloud costs.

5. Reactivation

What’s important to keep in mind is that you need to properly delete the services you don’t use. This is evident with Amazon’s Relational Database System. What can often happen is you stop it but you don’t properly delete it. This makes it automatically reactivate after seven days, and if you don’t check, you’re not aware until you take a look at your cloud bill.  

6. Wrong pricing agreements for your needs 

Another hidden cost of cloud computing lies in the pricing agreement you signed. Everyone’s cloud requirements are different, so you need to be cautious about pricing agreements. Sometimes your needs change as you scale up or down and yet you’re still in the same fixed pricing agreement. 

The main culprit: a lack of cloud expertise

If you make a simple mistake by not knowing exactly what your business needs from AWS, you will continually pay for this mistake until the end of the agreement. Take RDS reserved instances as an example, if you choose the wrong instance, the wrong size, etc, it doesn’t matter if you downgrade to a smaller instance, you will still have to pay for your original one. 

7. 24/7 cloud operations

It takes detailed analysis to understand how to make cost optimizations to your workload.  Perhaps your workload doesn’t need to run 24 hours a day and switching it off at weekends can cut down your cloud bill significantly. Deleting consistent idle instances could be the cost optimisation that makes all the difference to your cloud Return On Investment (ROI).

8. Overprovisioning

By overprovisioning we mean the thought process that we need more cloud resources than we actually do; a just in case mentality. This consequently leads to unused instances that you have to pay for. It’s proactive to have services in place to maximize availability and high performance but there is a line that can be crossed that means you’re paying for something unnecessary. 

Why is it challenging to manage the costs of cloud computing? 

The cloud is known for revolutionizing the way we do business by providing increased collaboration, organizational agility, and flexibility. So why is the cost of cloud computing so high and complicated to manage? 

Your business is scaling 

As your business grows or shrinks, your cloud workload needs to change with it. Your cloud usage most likely differs from month to month, making it difficult to track costs. Traditional payment models or fixed agreements present a rigid situation, that can be difficult to get out of. 

Your lack of in-house cloud expertise 

Without a comprehensive knowledge of effective cloud cost management, it’s difficult to determine what you need from the cloud. This leads to both overprovisioning and underprovisioning. You might choose a more powerful instance for a workload that doesn’t need this level of power. Essentially, you’re not taking advantage of the cost optimization opportunities out there because you’re not aware of them. 

Your cloud infrastructure isn’t organized correctly

The cloud framework you need is the AWS landing zone. A cloud landing zone enables complete centralized cost management for all your environments in your cloud architecture. This centralization makes it easy to obtain cost visibility and to implement cost management policies. 

The cloud landing zone helps you tightly manage the costs of the cloud; you can prevent certain users from making changes that impact your costs. With a multi-account strategy, businesses can allocate resources and workloads into separate accounts based on teams, projects, or departments. This enables cost isolation, as each account operates with its own budget and spending limits. You can easily keep track of spending patterns and facilitate accurate cost allocation, meeting the needs of each environment. 

You don’t have control over your access management

Without robust cloud access management, that would be solved with a multi account strategy with a landing zone, too many people have access to your entire cloud environment, generating new costs, and not leaving a clear trail of what these costs are and who is responsible for them. You have various teams and external vendors with access, which creates risk. People in your team will be using resources, and leaving them running, without considering cost implications, and you can’t prevent them from doing this without access management. 

You don’t have the time 

Without a centralized landing zone, you are required to have dedicated focus over your entire infrastructure, pretty much at all times. If you can’t commit the time to monitor your cloud spend, you will miss opportunities to detect and address anomalies. So if you have got a sudden spike in utilization, you don’t find out until you receive your bill. You’re required to pull data from multiple places to have cost control which naturally leads to inaccurate cost tracking. 

How can StackZone help to minimize the hidden costs of cloud computing?

With StackZone, there are no more hidden costs of cloud computing. This is because our platform provides you with the tools you need to not only easily understand your cost expenditure in real-time, but to create opportunities for you to optimize your cloud budget, driving your ROI. This has led to an average of 35% cost reductions for our customers.  All the information you need for cloud management is aggregated onto one user-friendly interface. 

We understand that managing cloud costs can turn into a full-time job, there aren’t enough hours in the day to carefully track all the cost activity. Our AWS cost optimization software alerts you when your attention is needed and provides expert cost analysis for you to make empowered decisions. For example, the platform alerts you when you’re approaching  50%, 80%, and 100% of your budget. You have everything you need to make the best cost decisions with intelligent insights at your fingertips. 

We get your cloud infrastructure aligned with principles with the AWS landing zone and take this further by adding further protection with proactive tools and policies. These equip you to simplify your entire cloud management, so while you’re making improvements to your cloud cost, you’re increasing your cloud security, and meeting the necessary regulations of your industry’s standards, 24 hours a day. 

Final considerations on the cost of cloud computing 

By addressing the hidden costs of cloud computing, it’s easy to keep tabs on business expenditure and increase your profit. With 24/7 monitoring and proactive cloud cost automation, StackZone empowers you to optimize your cloud budget and prevent any shock on the day you receive your cloud bill. Start your journey to cloud success by contacting us, and we’ll show you how our user-friendly platform transforms your cloud management from the moment it is set up. 

This article was written by Gaston Silbestein, Co-founder of StackZone

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