AWS Cost Optimization: 6 Free Tools & 10 Hacks to Cut AWS Bills

What Is AWS Cost Optimization? 

AWS cost optimization is the practice of managing and reducing cloud expenditures while maintaining performance and capacity. It involves analyzing your AWS usage and identifying areas where you can save costs without compromising the functionality of your applications. 

This can be achieved through various strategies, such as selecting the appropriate instance types, using discounted pricing models like reserved instances and spot instances, and using tools and services to automate cost optimization.

This is part of an extensive series of guides about IaaS.

In this article:

• 4 Reasons to Optimize Costs on AWS
• Pillars of AWS Cost Optimization
• 6 Free AWS Cost Optimization Tools
• 10 Cost Optimization Hacks to Cut Your AWS Bill

4 Reasons to Optimize Costs on AWS

For organizations heavily invested in AWS, cost optimization is becoming a critical activity. Here are four reasons organizations are prioritizing cost management:

• Reduce unnecessary spending: By optimizing costs, organizations can avoid paying for unused or underutilized resources, ensuring that funds are spent efficiently. This allows for better allocation of the budget to other critical areas.
• Improve financial planning: Cost optimization enables more accurate forecasting and budgeting, helping organizations plan their finances with greater precision. Predictable costs facilitate better strategic decisions and investment in innovation.
• Enhance competitiveness: Lower operational costs can give organizations a competitive edge by allowing them to offer services at more competitive prices or invest more in improving their offerings.
• Increase scalability and flexibility: Optimizing costs ensures that organizations can scale their operations up or down without incurring prohibitive expenses. This flexibility is crucial for adapting to market demands and supporting growth.

Pillars of AWS Cost Optimization 

Right-Sizing

Right-sizing involves matching your instance types and sizes to your actual workload requirements. This process helps in avoiding over-provisioning, which can lead to unnecessary costs, and under-provisioning, which can affect performance. AWS Compute Optimizer is a free tool that provides basic recommendations based on your usage patterns.

Increasing Elasticity

Elasticity in AWS means dynamically adjusting resource capacity to match the current demand. Implementing auto-scaling policies allows you to scale your infrastructure up during peak times and down during off-peak times. This ensures that you only pay for what you need, reducing costs associated with maintaining excess capacity.

Using the Right Pricing Model

AWS offers various pricing models, such as on-demand, reserved instances, and spot instances, each suited for different use cases. On-demand instances provide flexibility without long-term commitment, while reserved instances offer significant discounts for predictable workloads. Spot instances, available at steep discounts, are suitable for non-critical or flexible workloads that can tolerate interruptions.

Storage Optimization

Optimizing storage involves selecting the appropriate storage class based on access frequency and performance requirements. AWS offers multiple storage classes, including S3 Standard, S3 Infrequent Access, and S3 Glacier for archival. By using lifecycle policies, you can automatically transition data to lower-cost storage tiers as it ages, reducing storage costs.

Continuous Monitoring and Improvement

Continuous monitoring and improvement involve regularly reviewing and analyzing your AWS usage and spending. Tools like AWS CloudWatch and AWS Cost Explorer provide insights into usage patterns and cost trends. Implementing a culture of continuous improvement ensures that cost optimization measures are regularly updated and refined to adapt to changing business needs and AWS offerings.

6 Free AWS Cost Optimization Tools 

AWS offers some native tools that aid in cost optimization.

1. AWS Cost Explorer

Cost Explorer provides insights into your AWS usage and expenditure patterns. It offers an intuitive interface that helps visualize and analyze cost and usage data over various timeframes, such as daily, monthly, and yearly. 

With Cost Explorer, you can create custom reports that break down costs by service, linked account, and usage type. It also supports tagging, which allows you to categorize and track costs associated with different projects or departments, making it easier to allocate expenses and manage budgets.

Source: AWS

2. AWS Budgets

AWS Budgets provides the ability to set custom cost and usage thresholds. You can create alerts based on actual costs or usage, as well as forecasted costs and usage. This feature ensures you are notified before you exceed your set budgets, allowing you to take corrective actions in a timely manner. 

The tool supports various budget types, including cost budgets to monitor spending, usage budgets to track resource consumption, and reservation budgets to manage reserved instance utilization. AWS Budgets also integrates with Cost Explorer, allowing users to visualize budgets while viewing AWS costs.

Source: AWS

3. AWS Cost Optimization Hub

The AWS Cost Optimization Hub serves as a centralized platform that aggregates resources, best practices, and tools to help optimize your AWS spending. The hub features documentation that covers a range of cost optimization topics, from basic principles to advanced strategies. 

It also includes tutorials and webinars led by AWS experts, providing practical guidance on implementing cost-saving measures. Additionally, the hub shows customer success stories, which are real-world examples of how other organizations have reduced their AWS costs.

Source: AWS

4. AWS Cost Anomaly Detection

Cost Anomaly Detection uses advanced machine learning algorithms to automatically identify and alert you to unusual spending patterns in your AWS account. This tool continuously monitors cost and usage data, detecting anomalies that could indicate unexpected or unauthorized usage. 

When an anomaly is detected, you receive alerts that include information about the nature of the anomaly, affected services, and potential causes. This prompt notification allows you to quickly investigate and address the issue, preventing costly surprises on your AWS bill. The tool also provides historical analysis, helping you understand long-term trends.

Source: AWS

5. AWS Pricing Calculator

Pricing Calculator helps you estimate the costs of AWS services based on organization-specific requirements. The calculator provides a detailed breakdown of costs, allowing you to model different architectural scenarios and understand their financial implications. 

You can input your anticipated usage levels, select specific AWS services, and configure options such as instance types, storage volumes, and data transfer amounts. The tool then calculates the estimated monthly and annual costs. The pricing calculator can also save and share calculations, making it easier to collaborate with team members and stakeholders.

Source: AWS

6. AWS CUDOS

AWS Cost and Usage Report (CUDOS) provides comprehensive insights into your AWS costs and usage. This tool offers a detailed view of your spending, breaking down costs by service, usage type, and region. By integrating with other AWS tools, CUDOS enables you to analyze historical data, identify trends, and uncover opportunities for cost savings.

CUDOS supports advanced reporting capabilities, allowing you to create custom dashboards and visualizations tailored to your business needs. These insights help you understand the drivers of your AWS costs and make informed decisions to optimize resource usage and reduce expenses.

Source: AWS

Related content: Read our guide to AWS cost optimization tools

10 Cost Optimization Hacks to Cut Your AWS Bill