Introduction
In today’s cloud-first era, AWS has become the backbone of countless applications and enterprises, offering unparalleled scalability, reliability, and flexibility. Its pay-as-you-go pricing model is revolutionary, allowing businesses to only pay for what they use. However, this flexibility can also lead to unexpected surprises on the billing dashboard if resources are not carefully managed.
As the cloud infrastructure grows and becomes more complex, here are some of the common hurdles that businesses encounter
- Lack of Visibility and Control – With AWS’s vast range of services, tracking usage and spending across regions and resources can be daunting, making it challenging to identify cost drivers.
- Unpredictable and Spiky Costs – AWS services like EC2 and Lambda can face sudden usage spikes from traffic surges, misconfigurations, or accidental provisioning, leading to costly overruns if not properly monitored.
- Difficulty in Forecasting Costs – The complexity of AWS pricing models combined with the dynamic nature of cloud environments, makes it difficult for organizations to accurately forecast costs.
To help organizations address these challenges, AWS offers a range of powerful tools and services that include –
- AWS Pricing Calculator
- AWS Budgets
- AWS Cost Anomaly Detection
- AWS Cost Explorer
In this blog, we’ll explore how these AWS services can help businesses optimise their cloud spend, offering practical guidance on how to use them to manage, control, and forecast costs effectively.
Evaluating Service-Specific Costs
One of the most effective tools for managing costs before diving into AWS implementation is the AWS Pricing Calculator. This tool allows businesses to estimate the costs of AWS services in advance, helping to align cloud expenses with budgetary constraints and project requirements. The AWS Pricing Calculator is an interactive web tool designed to provide detailed cost estimates for AWS services. It’s particularly useful for planning new implementations, comparing service costs, or assessing the financial impact of scaling existing infrastructure.
Key Features include
- Allows users to create cost estimates based on specific workloads, configurations, and usage patterns.
- Provides a breakdown of costs for compute, storage, networking, and managed services, including associated charges like data transfers or snapshots.
- Accounts for variations in pricing across AWS regions, ensuring estimates reflect local cost structures.
For ex. consider a serverless application is being developed where AWS Lambda functions process user-submitted data. The Lambda function has a 500-millisecond execution time and is allocated 256 MB of memory, with 1 million invocations per month. Additionally, the application is estimated to transfer 10 GB of data out of AWS each month. The AWS Pricing Calculator is used to estimate the associated costs, factoring in free-tier usage for requests and compute time, with additional charges for data transfer beyond the free 1 GB allowance. In this example it would cost approximately $1.01 per month.
Knowing this cost upfront has 2 key benefits
Cost Awareness and Preparedness
It allows you to plan development scenarios while considering the impact of each factor on the overall cost. This preparation ensures you’re aware of potential costs, enabling better budgeting and adjustments if any parameters change during the execution phase.
Improved Service Understanding and Risk Mitigation
While some cost factors for this cost calculation might be unknown at the start, understanding that these factors contribute to the total cost helps you gain a deeper insight into the service. This awareness allows you to be better prepared for potential cost fluctuations or the worst-case scenario as your usage scales or requirements evolve.
To know more about how to create an estimate see this. AWS enables users to create cost estimates across services, which can be saved and shared for collaborative planning.
AWS Budgets for cost tracking
AWS Budgets helps you proactively manage costs by providing early warnings if your spending exceeds your expectations, allowing you to address issues before they become larger problems. You can create budgets based on cost, usage, or specific service usage. Whether you’re tracking monthly costs or monitoring the usage of a particular service, AWS Budgets allows you to set thresholds and receive notifications when your actual costs or usage exceed your predefined limits. This feature ensures that you are immediately aware of potential overages and can take corrective action.
The 2 most frequently used templates include – ‘Zero budget spend’ and ‘Monthly Cost budget’. As the name suggests ‘zero budget spend’ notifies you once your spending exceeds $0.01 which is above the AWS Free Tier limits and is relevant when you are in your free tier account usage.
The ‘Monthly Cost budget’ is more relevant for businesses beyond the free tier usage. For eg. if you estimate your monthly cost for AWS account to be around 100$, its safe to setup budget exceeding 20% of this cost which is 120$. This means you will be notified when 1) your actual spend reaches 85% 2) your actual spend reaches 100% 3) if your forecasted spend is expected to reach 100%.
Cost Anomaly Detection
AWS Cost Anomaly Detection is an advanced tool designed to help you identify unusual spending patterns in your AWS environment. By leveraging machine learning algorithms, it provides automated insights into unexpected cost variations, enabling you to take timely action to control costs. While AWS Budgets tracks overall cost trends or specific usage against planned limits for a fixed period, AWS Cost Anomaly Detection, on the other hand, focuses on reactive monitoring by identifying unusual spending patterns, even within budgeted thresholds.
For ex. If your usual daily Lambda costs are $2 but suddenly spike to $8 on a single day due to unexpected increases in invocations or execution time, AWS Cost Anomaly Detection flags this as an anomaly, even if your total monthly cost is still under the budgeted cost.
By identifying anomalies early, you can investigate and address potential cost drivers before they escalate into significant expenses. When starting out with the Cost anomaly or a new AWS account, It’s advisable to set up monitoring at a Service level. This grants you the basic required monitoring.
As you get familiar with this service or depending on your account usage, you can opt for ‘Cost category’ or ‘Cost Allocation Tag’ that helps you track and identify unusual spending patterns based on specific tags applied to your resources. This enables granular cost monitoring and provides insights into anomalies within tagged projects, environments, or business units.
You can attach ‘Alert Subscription’ to these monitoring alerts that notifies you when a cost monitor detects an anomaly. Depending on the alert frequency, you can notify designated individuals by email.
Visualizing and Analyzing Your Cloud Spend
AWS Cost Explorer is a visualization tool that provides insights into your AWS spending and usage patterns over time. It enables you to analyze historical data, identify trends, and predict future costs, offering an intuitive way to manage and optimize your cloud expenses. A typical cost explorer dashboard would look like this
Some of the Key Benefits include
- Cost Explorer provides a breakdown of your AWS usage and costs across services, accounts, and tags, helping you pinpoint cost drivers.
- With cost predictions based on historical data, it helps in estimating future expenditures and planning budgets effectively.
When viewing the current month cost, its most effective to use the Date range of ‘Month-to-date’ , granularity of ‘Daily’ and a groping dimension of ‘Service’. This will allow you to view per service charges on a daily basis as shown below
By enabling focused analysis, filters in AWS Cost Explorer make it easier to identify the root cause of cost spikes. It allows you to customize your cost and usage reports by focusing on specific attributes such as services, accounts, regions, or tags. This precision helps in identifying and analyzing cost spikes effectively.
For ex. By filtering costs by AWS regions, you can detect if a spike is related to region-specific activity, such as higher usage in a particular geographic area.
Addressing Unexpected Costs
The above described methods help one proactively highlight the cost spikes. However, it doesn’t help to avoid them. So what do you do if you encounter unexpected charges?
Try to find the root cause of the issue
The Cost explorer helps in understanding the service associated with the cost spike. You can make use of the filters to appropriately drill down to the Region to try to understand the resource that is possibly causing the spike.
Reach out to AWS Support promptly
The AWS support team can help investigate and resolve the issue, providing clarity on the root cause. In cases of genuine mistakes or misconfigurations, AWS Support may also offer billing adjustments, ensuring that your costs align with actual usage. Don’t hesitate to leverage this valuable resource for maintaining cost efficiency and transparency.
To Summarise
Effective cost management in AWS is not just about reacting to spikes but proactively planning and monitoring your spending. Tools like AWS Cost Anomaly Detection, AWS Cost Explorer, and AWS Cost Calculator empower businesses to visualize, predict, and control their cloud costs while optimizing resource usage. Taking preventive steps, such as setting up cost alerts and anomaly detection models, helps highlight potential issues early.
However, In case of unexpected cost spikes, leveraging AWS customer support can provide quick resolutions. AWS’s support team is highly responsive and prioritizes customer satisfaction, especially for long-term users, ensuring that issues are addressed efficiently.
By combining these tools and strategies, you can maintain better financial oversight, avoid surprises, and ensure your cloud infrastructure remains both scalable and cost-effective.
