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AWS Cost Optimization: 11 Best Practices for Maximizing Value

Originally Published July, 2023 · Last Updated July, 2024
cost optimization best practices

Navigating the vast expanse of Amazon Web Services (AWS) can feel like commanding a ship through an endless sea: There’s a ton of potential, but it’s easy to drift off course. 

While AWS offers a diverse range of services designed to boost business performance, the sheer complexity and scale of its offerings can often lead to unexpected and escalating costs. It’s here, in the complex world of cloud computing, that AWS cost optimization becomes a vital compass for businesses.

This compass isn’t just about controlling expenses—it’s about creating value. When properly optimized, your AWS environment doesn’t merely save you money. It becomes a streamlined, high-performance machine that aligns perfectly with your business goals and scales with you. 

Achieving this state isn’t just a matter of luck or guesswork. It requires a strategy informed by a set of best practices. Below, we’ll cover those practices to help you navigate AWS cost optimization for maximum efficiency, effectiveness, and—most importantly—value. 

1. Use an automated cloud cost optimization platform like Prosper Ops

Navigating AWS cost optimization begins with understanding and leveraging the power of an automated rate optimization tool. Essentially, these tools automate the process of selecting the most cost-effective rates for your AWS resources. 

With a combination of data analytics and machine learning, these tools can identify trends, predict usage, and recommend the most economically efficient solutions tailored to your unique needs.

As a tool specifically designed to help businesses thrive in the world of AWS, ProsperOps takes AWS cost optimization to the next level. We don’t merely identify where you can save a few pennies—we transform your entire approach to AWS usage into a strategic, value-maximizing operation.

Key features of Prosper Ops

  • Strategic RI/SP purchase automation: The Reserve Instances (RIs) and Saving Plans (SPs) offered by AWS can provide significant cost savings, but selecting the right plan can be complex. ProsperOps does the heavy lifting for you, using intelligent automation to determine and execute the optimal purchasing strategy.
  • Autonomous Discount Management: This solution combines several cloud discount instruments, optimizing them for impressive savings rates while minimizing risk. Through Convertible RI automation, Flex Boost, and precise Compute Savings Plan management, businesses unlock significant savings without compromising flexibility or commitment terms.
  • Intelligent Showback: ProsperOps eliminates the unpredictability of native discount allocation tools by providing multiple methods to allocate costs and savings based on dimensions like regions, resources, and service types. 

This lets businesses effortlessly allocate cloud costs and savings, providing accurate and controlled sharing of savings benefits across different business units, product lines, and geographies.

  • Dynamic Prepay Amortization Tracking: This feature simplifies the tracking of changes to amortization schedules for prepayments, providing finance and accounting teams with a clear chart summarizing the impacts. 

This feature covers Savings Plans and Reserved Instances, ensuring accurate and up-to-date information on cloud spend.

  • Continuous cost optimization: ProsperOps isn’t a set-it-and-forget-it tool. It continually monitors your AWS environment, adapting strategies to changes in usage, pricing, and AWS discount offerings.
  • No-hassle management: With ProsperOps, there’s no need to micromanage your AWS environment. Our tool handles the complexities, freeing up your time to focus on what really matters—driving value for your business.

The beauty of ProsperOps lies in its singular focus: maximizing AWS value. It’s not just about cost savings—it’s about building a sustainable, scalable AWS environment that aligns perfectly with your business objectives. 

With our comprehensive, intelligent approach to AWS cost optimization, you’re not just saving money—you’re investing in a future of growth and prosperity. 

So, why not give ProsperOps a try?

2. Right-size your resources

Right-sizing is a fundamental aspect of AWS cost optimization that involves aligning your resource usage with your workload requirements to prevent waste. 

Just like you wouldn’t buy a high-end sports car for a quick trip to the grocery store, you shouldn’t pay for an oversized AWS instance for something you could handle with a smaller, less expensive alternative.

The danger of not right-sizing lies in over-provisioning and underutilization. Over-provisioning occurs when you allocate more resources than necessary for a particular task, while underutilization happens when the provisioned resources aren’t completely used.

Both scenarios lead to unnecessary costs—which can severely impact your AWS bill. This is why continuous monitoring and periodic assessment of your workloads and their respective resource consumption is vital to keeping your AWS environment optimized and your costs under control. 

Remember: In the cloud economy, efficiency is the currency, and right-sizing your resources is a prime strategy to save on that currency.

3. Use cost-effective storage solutions

Data is the lifeblood of any digital business, but not all data is accessed or used equally. It’s crucial to select storage options that reflect your data access patterns to optimize costs. 

AWS provides a spectrum of storage solutions, each designed for different use cases and access frequencies. Understanding these options and aligning them with your data usage patterns can dramatically reduce your storage costs.

A standout feature of AWS’s storage offerings is Amazon S3 lifecycle policies. These policies allow you to automate data movement between different storage classes based on predefined rules and timings. 

For instance, maybe you have data that’s frequently accessed at first, but sees diminished use over time. With S3 lifecycle policies, you can automatically move this data from a standard storage class to a cheaper infrequent-access or archive storage class once it reaches a certain age.

4. Monitor and track service usage

Keeping a vigilant eye on your AWS service usage is akin to checking a patient’s vital signs: It’s an early warning system that detects issues and anomalies before they become costly problems. 

By regularly monitoring and tracking service usage, you can gain insights into trends, identify inefficient resource usage, and track your spending against your budget. This allows you to spot areas where you could potentially cut costs or better align resources with business needs.

Equally important is the detection and response to cost anomalies. For instance, let’s say your average AWS spending is $1 million per month. Suddenly, a $20k anomaly occurs. This might seem negligible against your total spending, and without diligent monitoring, it could easily go unnoticed. 

However, if this anomaly repeats over several months, you’re looking at a significant leak in your budget. Machine learning (ML) can be invaluable in detecting such anomalies and setting alerts for unusual activity, ensuring you stay ahead of potential cost escalations. 

The key usually lies in the details. When you stay alert to these small, seemingly insignificant cost fluctuations, you can eliminate them before they become substantial financial drains. 

Again, this is where a tool like ProsperOps can help—detecting these anomalies and streamlining timely corrective action.

5. Leverage Spot Instances

AWS’s dynamic and flexible nature allows you to choose what resources you use and how you use them. A great example of this is Spot Instances. These are unused EC2 instances that AWS offers at a significantly lower price than On-Demand or Reserved Instances. They’re called “spot” because their availability and price vary based on supply and demand.

However, while Spot Instances offer considerable cost savings (up to 90% off the On-Demand price), they come with a catch: AWS can reclaim them with just two minutes of notice if needed elsewhere. 

Because of this, Spot Instances are ideal for non-critical, fault-tolerant workloads where an unexpected interruption wouldn’t cause significant disruption.

6. Optimize data transfer costs

Data transfer costs can often be a hidden expense within your AWS bill, especially if your workloads span across different regions or if you transfer data frequently. It’s important to note that data transfers within the same AWS region are typically free, while data transfers between regions (or out of AWS entirely) can incur costs.

One way to optimize these costs is to use AWS services within the same region whenever possible. By minimizing cross-region data transfers, you can significantly reduce your costs. When this isn’t possible or when high-speed data transfer is essential, services like AWS Direct Connect or Amazon CloudFront can be extremely beneficial. These services optimize network performance and reduce costs by providing a dedicated network connection between your premises and AWS or by caching content at the edge location closest to your users.

7. Employ cheaper microarchitectures

Cost optimization in AWS isn’t only about service usage and data management—it extends to the core of your computing resources. 

Employing cheaper microarchitectures (like ARM-based AWS Graviton processors versus traditional x86-based processors—or even AMD versus Intel within the x86 architecture) can lead to substantial cost savings.

For instance, Graviton processors offer up to 40% better price-performance ratio over comparable x86-based instances for a broad spectrum of workloads. Similarly, AMD instances can provide a more cost-effective solution for many general-purpose and memory-optimized workloads than Intel instances.

Of course, the choice of microarchitecture depends on your specific workloads and performance requirements. That’s why it’s crucial to carefully evaluate your computational needs against the cost and performance offered by these different architectures. 

Implementing such changes, especially when coupled with an automated cost optimization tool like ProsperOps, can lead to significant improvements in both performance and cost efficiency.

8. Enable auto-scaling and load balancing

In a traditional, non-cloud environment, you’d need to estimate the maximum amount of resources needed during peak usage times and keep those resources running continuously—leading to significant waste during off-peak times. 

With AWS, you can dynamically adjust your resources based on demand, thanks to services like Auto Scaling and Load Balancing.

Auto Scaling allows you to scale your resources up or down based on actual demand. For example, if you have a web application that gets more traffic during business hours, Auto Scaling can increase your resources during those times and decrease them during the off-hours. This way, you only pay for what you use. 

Similarly, Load Balancing distributes incoming application traffic across multiple targets, such as EC2 instances, to ensure smooth operation during peak demand.

9. Implement cost allocation tags

As organizations grow and their AWS usage expands, tracking and managing costs can become increasingly complex. This is where cost allocation tags come into play. These are user-defined labels you can attach to AWS resources, allowing you to categorize and track your AWS costs across different departments, projects, or teams.

Cost allocation tags can be invaluable in providing visibility into exactly where your AWS budget is going. By tracking costs with this granularity, you can identify trends, spot inefficiencies, and pinpoint areas where optimization is needed. For example, if one project or team’s AWS usage is significantly higher than others, you can investigate and identify if there are opportunities to optimize.

Whether you’re dynamically adjusting resources or tracking costs more precisely, automation is your ally. A tool like ProsperOps can assist in implementing these strategies efficiently, making the journey toward AWS cost optimization smoother and more manageable.

10. Leverage Reserved Instances

In the world of AWS cost optimization, understanding your workload requirements and aligning them with the most suitable pricing models is key. If your workloads are predictable and steady, Reserved Instances (RIs) can provide substantial cost savings compared to On-Demand instances.

Reserved Instances allow you to reserve AWS resources for one or three years in return for a significant discount—up to 75% compared to On-Demand pricing. These instances are ideal for steady-state workloads, where resource needs are predictable and consistent over time. 

By analyzing your workload patterns and committing to RIs (where suitable), you can significantly reduce your AWS costs over the long term.

11. Develop a culture of cost-conscious developers

Ultimately, the success of any AWS cost optimization strategy depends heavily on the people implementing it—your developers. Encouraging a culture of cost-conscious developers can lead to more efficient usage of AWS services and significant cost savings. 

This involves educating developers about the costs associated with the AWS resources they’re using and encouraging them to think critically about how to achieve the same results with fewer resources or cheaper alternatives.

Developing this kind of culture doesn’t happen overnight. It requires continuous education, awareness, and encouragement from leadership. However, the payoff can be huge. When everyone in the organization is mindful of costs and constantly looking for ways to optimize, cost savings will follow naturally. 

Maximize the value of your cloud investments with ProsperOps

Optimizing AWS costs isn’t a one-time task—it’s an ongoing journey. Leveraging Spot and Reserved Instances, selecting cost-effective storage options, using data transfer services wisely, and embracing cheaper microarchitectures are just a few ways to navigate this path. 

But there’s more to it. Developing a culture of cost awareness and leveraging intelligent tools are equally critical. That’s where ProsperOps shines, offering automated rate optimization to help you stay ahead of the game. Start making the most of your cloud investments today. Experience the next level of AWS cost optimization with ProsperOps by your side.



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