AWS Cost Optimization Best Practices


Cloud costs are a daily concern for companies running applications on Amazon Web Services (AWS). To address this concern of giant enterprises, we have penned down key AWS cost optimization best practices. This makes sense because many organizations struggle with unexpected AWS charges. Although many organizations have a cloud budget in place, accurately controlling costs is difficult. No matter where you are in your cloud journey, reducing your AWS costs is something you’ll want to do continuously.

Why your company should adhere to AWS cost optimization best practices? There are three main reasons to optimize AWS costs:

 1 – Reduce costs by only paying for what you need. Identify data and resource which at certain points in time may no longer be required.

Rightsizing workloads allow you to take advantage of pre-purchase discounts with higher returns while ensuring that productivity and performance are not affected. Statistics and cost allocation across workloads allow you to calculate ROI.

2 – IT Agility Cost optimization can free up resources to fund more projects that serve customer needs or improve existing workloads

3 – Streamline workloads and servicesWith all the services AWS offers, you may be paying for ones that aren’t needed or are redundant. AWS provides recommendations based on past customers and industry knowledge to help you choose the most suitable options for your business.

What is cost optimization in AWS?

Traditional cost optimization relies on techniques that focus on anything that reduces the overall budget or expenses. It often looked at ways to reduce overall costs and expenses rather than analyzing whether the chosen options are right for your business. For example, some companies are required to take advantage of any discount offered by a vendor, even if it is not relevant to business needs.

AWS Cost Management Tools

AWS provides customers with a wide set of free tools to manage and optimize costs. They help you collect and analyze data, make better decisions, and create automated rules to help you save money on AWS. In order to follow aws cost optimization best practices, you can check out the below mentioned tools:

  • AWS Billing Console: The AWS Billing console provides access to your invoices and expense summaries and trends. Cost tagging and distribution can be used to filter cost and usage reports by customer-defined groups such as project or department. Consolidate AWS accounts to create one billing group for every project or budget in your company. Check your free tier and carbon footprint.
  • AWS Cost Explorer: AWS Cost Explorer provides flexible reporting and visual analysis of your AWS costs and usage over time. It offers a variety of detailed views, filters and forecasts to help you explore and understand your costs.
  • AWS budgets: The AWS Budgets tool allows you to set and track budgets for your AWS expenses. Budgets can be set based on a wide range of cost and usage metrics and triggered based on actual, forecasted or dynamically adjusted costs. This tool allows for a variety of settings from tracking total monthly costs against the company budget to more granular tracking of EC2 operating hours. Budgets allow for a limited set of actions in response to exceeding thresholds; In addition, they are integrated with Chatbot, notification service and email services.
  • AWS Trusted Advisor: For users at the Business Support level or higher, AWS Trusted Advisor provides a set of cost optimization checks. It can identify low EC2 instance utilization, unassigned elastic IPs, idle load balancers, and more. A trusted advisor then offers suggestions to fix the problem, such as recommending you delete unused EC2 instances to lower your monthly bill.
  •  Amazon Cloud Watch: Cloud Watch monitors your AWS applications and resources in real time. It collects and displays data in the console, either in prebuilt views or in custom dashboards that you can create for your own AWS environment. Monitors metrics and sends notifications or alerts based on rules you define. You can even configure it to automatically change monitored resources when thresholds are reached. For example, it can automatically start more instances when CPU usage reaches a certain threshold, or stop underutilized instances if they remain idle for a certain period of time.


Most AWS cost optimization tools send notifications and alerts to IT staff so they can address cost issues before they get too big. They can use built-in reporting to monitor AWS usage to better understand which services are being used the most and why.

IT teams can use them to better report AWS costs to finance and senior management, who use the information for forecasting and planning.

From a business perspective, a good AWS cost optimization policy aligns cloud costs with the business metrics that matter most to your company. These include cost per customer, feature/transaction, cost of goods sold (COGS), and more. AWS Cost Optimization also shows teams how each project affects the company’s bottom line, competitiveness, and ability to fund future growth.

However, using AWS cost optimization tools is not enough to reduce costs. You also need measures to ensure that you keep costs as low as possible without affecting performance and productivity. For further information, check out our case study on cloud cost optimization for a crypto exchange firm.

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