AWS Cost Categories: Use Cases, Concepts & Quick Tutorial

What Are AWS Cost Categories? 

AWS Cost Categories is a feature of the Amazon Web Services (AWS) platform, which allows users to organize their cost and usage information. This organization enables more precise cost management across various AWS services, enabling allocation and tracking of cloud expenses. The system categorizes costs according to defined rules, such as linked accounts, service types, or tags, and displays them consistently in cost management reports.

Cost Categories are an important component of AWS's financial management tools. By employing custom categories, organizations can gain insights into specific cost drivers and better align their cloud expenditures with business objectives. These insights facilitate more informed decision-making and support strategic planning, budgeting, and forecasting of cloud costs.

This is part of a series of articles about AWS cost management.

In this article:

• AWS Cost Categories Use Cases
• How AWS Cost Categories Works: Key Concepts
• AWS Cost Categories vs. AWS Tags: What Are The Differences?
• Tutorial: Managing Your Costs with AWS Cost Categories

AWS Cost Categories Use Cases 

Automatically Categorize Cloud Cost Information

Automatically categorizing cost information simplifies the task of managing cloud expenses. AWS Cost Categories enable this automation through predefined rules that automatically classify costs. These rules can be based on a variety of dimensions, such as service type, linked account, or tag value, ensuring that data is consistently categorized according to your organizational needs. 

This automation reduces manual effort and allows for more accurate financial reporting and analysis. Automated categorization ensures that all spend data is aligned with the established organizational structure. It helps maintain consistency over time, making it easier to track and compare costs across reporting periods, supporting strategic financial planning.

Define Split Charge Rules Based on Your Business

Defining split charge rules is crucial to accurately distribute costs in shared environments. AWS Cost Categories allow users to create these rules based on organizational needs, ensuring that shared costs are proportionately allocated to appropriate entities. This distribution can be based on resource usage, predefined ratios, or other relevant metrics, which provides a fair representation of shared costs.

Implementing split charge rules helps organizations achieve greater transparency in expense allocation. By reflecting true cost implications among departments or projects, these rules enable teams to understand their financial impact and drive efficient resource usage.

Create Multilevel Hierarchical Relationships

AWS Cost Categories facilitate the creation of multilevel hierarchical relationships, which allows for sophisticated expense tracking. These hierarchical structures reflect organizational models, simplifying the process of monitoring costs across multiple levels. Businesses can establish categories based on departments, projects, or other relevant segments to view expenses aligned with their internal configurations.

The benefits of hierarchical relationships extend beyond organization. They enable businesses to perform granular financial analysis, providing detailed insight into how costs are incurred and where optimizations can be made. This level of detail is critical for accurate budget planning and resource allocation, paving the way for enhanced cost-efficiency and strategic decision-making.

Related content: Read our guide to AWS Cost Analysis. 

How AWS Cost Categories Work: Key Concepts 

Cost Category Name

A Cost Category Name is the label or identifier assigned to a specific cost category within AWS. It helps organize and manage costs by grouping related expenses under a meaningful, descriptive name. This name is crucial because it enables users to quickly understand which costs are being tracked and where they originate. 

For example, names like "Cost Center," "Team," or "Application" might be used to distinguish between different departments, projects, or workloads. AWS imposes specific naming conventions: the name must be unique within the account, and it is case-sensitive, meaning "Application" and "application" would be treated as two different categories.

Rule Types

Rule Types in AWS Cost Categories define the logic that determines how costs are classified and allocated into specific categories. There are two main types of rules: 

• Regular rules categorize costs based on predefined criteria, such as AWS accounts, services, or tags. For instance, you could create a rule that categorizes all costs from a specific AWS account into a "Development" cost category. 
• Inherited rules are more dynamic. They automatically categorize costs based on existing dimension values inherited from other cost categories.

Dimensions

Dimensions are the building blocks for defining rules within AWS Cost Categories. These act as filters that determine how costs should be grouped based on different aspects of cloud usage. AWS supports five primary dimensions: 

• The Account dimension relates to AWS account names or IDs, allowing costs to be categorized by specific accounts within an organization. 
• The Service dimension focuses on the type of AWS service, such as EC2, S3, or RDS, making it easy to track costs based on which services are being utilized. 
• The Charge Type dimension includes various billing components like taxes, credits, and savings plans, providing more granular insight into what constitutes the overall charges. 
• The Tag Key dimension allows costs to be filtered based on user-defined tags that label AWS resources. 
• The Cost Category dimension lets users categorize costs using other pre-existing cost categories, offering even more flexibility.

Operations

Operations are logical expressions that help fine-tune cost categorization by specifying conditions that must be met for a rule to apply. In AWS Cost Categories, operations act similarly to boolean expressions, allowing users to define complex filtering criteria. The available operations include "Is," "Is not," "Is absent," "Contains," "Starts with," and "Ends with." 

For example, the "Is" operation filters for an exact match, such as categorizing costs for a particular service like EC2. The "Contains" operation allows for more flexible filtering by looking for partial matches, such as any cost entries that include a specific text string. "Is not" excludes costs that match a particular value, while "Is absent" filters out costs for which a given tag or key is not present.

Quotas

When creating and managing AWS Cost Categories, there are several quotas or limitations to keep in mind. These quotas exist to ensure that cost management remains efficient and scalable within an AWS environment. 

Each AWS management account can create up to 50 cost categories, providing flexibility to define various categories across different business units, projects, or teams. Each cost category can contain a maximum of 500 rules, giving organizations plenty of room to create detailed and complex cost structures. Additionally, there is a limit of 10 split charge rules per cost category. 

Related content: Read our guide to Cost Allocation Tags

AWS Cost Categories vs. AWS Tags: What Are The Differences? 

AWS Cost Categories and AWS Tags both aid in organizing cloud resources but serve different purposes. 

Cost Categories provide a higher-level abstraction for cost management, allowing businesses to group costs beyond individual resource tags. They offer a financial perspective by enabling more sophisticated expense tracking and management across multiple resources or accounts.

AWS Tags are labels added directly to AWS resources for identification and sorting. Tags facilitate resource management and access, providing a granular level of detail for tracking purposes. While tags are useful for operational purposes, Cost Categories provide a strategic tool for higher-level financial analysis and optimization.

Tutorial: Managing Your Costs with AWS Cost Categories 

AWS Cost Categories provide an effective way to organize, monitor, and manage your cloud expenses. In this tutorial, we'll walk through the key steps to set up and manage cost categories, including creating categories, defining rules, and leveraging multi-level hierarchies to mirror your organizational structure. These instructions are adapted from the AWS documentation.

Step 1: Create Categories

To create, cost categories:

1. Begin by signing into the AWS Billing and Cost Management Console. If you don’t have an AWS account yet, create and activate one to access these features.
2. Navigate to the Cost Categories section of the console. Here, you can start creating your cost categories. For example, if your organization is divided into teams, you can create a cost category called "Teams" and assign accounts to different teams like "Alpha" and "Beta." These teams will be visible across AWS cost tools like Cost Explorer and Budgets, making it easier to track and analyze team-specific spending.

Step 2: Define the Cost Category Rules

Once you've created a cost category, you can define rules that specify how costs should be classified. These rules can be based on dimensions such as accounts, services, or tags. For example:

1. Assign the “Alpha” value to all accounts linked to Team Alpha. 
2. Ensure that rules are ordered by priority since earlier rules take precedence over later ones.

For shared costs, you can create a "Shared Costs" category and define how those costs should be distributed across teams or departments. AWS allows you to apply methods like even-split, fixed-percentage, or proportional cost-based allocation, ensuring accurate and fair distribution of shared expenses.

Step 3: View the Category Details

Once your cost categories are set up, visit the Cost Category Details page to review how costs are allocated. You’ll see both graphical and numerical breakdowns of categorized and uncategorized costs. If you’ve defined split charge rules, this page also displays split costs before and after allocation, and you can download detailed CSV reports for further analysis.

Step 4: Implement Multi-Level Hierarchies

AWS Cost Categories allow you to create hierarchical relationships that reflect your internal organization. For example, if your teams “Alpha” and “Beta” belong to different departments, you can set up a "Department" category and group these teams under their respective departments. This structure lets you analyze costs at every level of the hierarchy, from individual teams to entire departments.

Categorizing Departments into Cost Centers

You can further organize departments into broader cost centers. For example, group the "FinOps" and "Platform Engineering" departments under a "Cloud COE" cost center. This flexible hierarchy mirrors the organization’s complexity and provides visibility into costs at all levels.

Go Beyond AWS Cost Categories with Finout

While AWS Cost Categories provide a foundational approach to organizing and managing cloud expenses, Finout’s FinOps platform takes cost management to the next level. With Finout, you can centralize cost data from multiple cloud providers and tools, including AWS, Kubernetes, and third-party SaaS, creating a single source of truth for your cloud spend. Our platform enables advanced features like advanced cost allocations, real-time cost visibility, and in-depth anomaly detection—delivering actionable insights beyond what AWS native tools offer. Whether you’re building chargeback models, tracking unit economics, or optimizing multi-cloud environments, Finout empowers you to drive cost efficiency at scale with unmatched granularity and ease.