Volume Discounts and Picking the Right Tools

As with many things, the more we buy, the more we can save. AWS is no exception, but we do have to go about these things in a structured manner.

Discounts for your baseline

Once we have enough data on our baseline usage, it's generally a good idea to buy that capacity in bulk because AWS offers discounts in the form of various purchase plans. Depending on the options and what might work out best for our situation, we can choose to either pay everything up front, pay only a portion upfront, or just pay along the way. These purchase plans are discounted over on-demand pricing because the customer is asked to commit to a certain amount of resources or a certain spend over a time—usually 1 year or 3 years.

Smart companies can greatly reduce their AWS costs by using these purchase plans to cover their baseline needs, and then just pay on-demand or Spot Instance rates for anything beyond that baseline. That said, these purchase plans can be a bit confusing, and there are quite a few permutations available. We’ll go deeper into these various options later.

Consolidate accounts

It is very common for companies to have numerous AWS accounts that sometimes run into triple digits. This could be done to separate duties, have separate accounts for production environments, or allow different departments to manage their own accounts. Of course, some companies might have many accounts because they didn’t have any controls in place when they started their AWS journey.

Having all these accounts can be a nightmare to manage, especially if we need to enforce some security standards. It will be far easier and more beneficial to manage our company’s overall AWS spending if we have all these accounts associated with one billing account. Each account can still have visibility into its portion of AWS spending, but we really need to see the full picture for a few reasons.

First, consolidating billing allows us to use the built-in tools from AWS to “slice and dice” the figures to identify areas for cost optimization or purchase plans. Otherwise, we’d have to manually collect all the invoices across all the accounts and somehow consolidate and compare offline. Second, by consolidating our billing, we are also going to consolidate usage. Some AWS services offer price breaks and discounts as our usage of those services goes up. For example, consider the following sample data egress charges: