Cloud cost management

Key takeaways:

• Effective cloud cost management ensures resources are monitored and optimized, preventing unexpected cost spikes.

• Cloud providers offer various pricing models (e.g., Spot Instances, Reserved Instances, Savings Plans, Pay-as-You-Go, Subscription-based) to cater to different usage patterns and customer needs.

• Cost models like Pay-as-You-Go and Savings Plans provide flexibility in resource usage and pricing, helping businesses optimize their cloud spend.

• Tools like Amazon CloudWatch help track usage, identify inefficiencies, and recommend cost-effective solutions for managing cloud resources.

• Scaling cloud resources can lead to higher costs; regular reviews and adjustments are necessary to avoid over-provisioning and ensure cost efficiency.

Cloud cost management manages cloud costs through a well-monitored and standardized process. Customers can check their cloud costs based on resource consumption, optimize the prices, and regularly upgrade to packages that are more suitable to their requirements. Maintaining costs without a centralized system can be difficult because they can increase rapidly during resource-intensive processes.

Cloud cost models

Cloud cost models are the standard pricing structures that service providers set to charge customers for using their cloud services. These models help determine how customers will be billed for the resource. Let’s discuss the commonly used cloud cost models.

1. Spot instances

It is a cost-saving model with good discount offers available around the year for non-critical and fault-tolerant traffic. They are space computing resources offered at a reasonable rate but can be terminated when the provider wants. Therefore, it is only feasible for processes that will not be critically affected by the interruption.

2. Reserved instances

It is a cost-effective model in cases where you can accurately predict the required resource capacity to compute the processes. There are big discounts available if the customer commits to a specific computing capacity for an evident period of time. Moreover, the billing is based on the total capacity rather than the total instances, so the customer can change the sizes as required.

3. Savings plans

It is a commonly used cost model by major cloud service providers, including AWS and Azure, to provide cost-efficient discounts and flexible pricing to committed customers. Generally, the customers should have one to three years of commitment to avail the perks of the savings plan. The offers are provided on the total capacity, therefore, providing liberty in resource usage.

4. Pay-as-you-go

It is a per-use basis cost model that charges the customer for each used resource individually and is commonly availed by customers who require a customized package. It provides the customers the flexibility to add or remove the resources according to their requirements and pay only for them. However, as the use increases, the resources increase and, consequently, the cost, which can, at times, get difficult to manage.

5. Subscription-based

It is a monthly or annual payment-based method in which the customers can pay a specified payment every month and avail of the resources for a pre-determined period of time. It is best suited for larger companies that have a predetermined set of services and features to avail and use them to their full capacity limits throughout the set time.

Note: Using to the full capacity does not means it is insufficient and by the nearing end of the time period capacity issues arise. In this case, upgrade to a cost model that provides sufficient capacity.

Cost management tools

Cloud service providers have developed cost management tools that are used to track the usage of resources across the cloud service. These tools offer recommendations and optimal packages to provide secure plans and provide effective ways to cut costs.

Want to learn more? Check out the "What is Amazon CloudWatch" Answer to learn about the basics of Amazon Cloudwatch.

How to reduce cloud costs

It can be expensive to purchase costly cloud services for a long period of time, requiring larger resource consumption. There are different ways to reduce the cost of providing a cost-effective experience to customers on the cloud.

Let’s discuss a few ways that help in reducing cloud costs.

Advantages of cloud cost management

Some of the advantages of cloud cost management are given below:

• Identifies and eliminates underused resources, reducing unnecessary spending.

• Helps forecast and control cloud expenses with clearer budgeting.

• Ensures the right amount of resources are used and prevents wastage.

• Allows businesses to scale up/down as needed to optimize cost.

• Provides insights into usage patterns and spending which enable better decisions.

• Predicts future costs based on current usage for proactive budgeting.

Summary

Cloud cost management is a preferred approach to optimizing costs and tracking resource usage. Based on the requirement, the customer can select different cost models. To avail models cost-effectively, different methods can be used to reduce the cost, including cloud cost management tools. Many cloud service providers offer monitoring tools to facilitate customers’ monitoring of resource usage.