COST07: How do you use pricing models to reduce cost?
Leverage different AWS pricing models and strategies to optimize costs across your workloads. Understanding and implementing the right pricing models can significantly reduce your overall AWS spend while maintaining performance and availability requirements.
Overview
Using pricing models effectively requires understanding the various options available, analyzing your usage patterns, and implementing the most cost-effective combinations for your specific workloads. This includes leveraging Reserved Instances, Savings Plans, Spot Instances, and other pricing mechanisms to optimize costs.
Key Principles
Usage Pattern Analysis: Understand your workload usage patterns to select the most appropriate pricing models for different components and scenarios.
Commitment Strategy: Balance the cost savings from commitments (Reserved Instances, Savings Plans) with the flexibility needed for changing requirements.
Geographic Optimization: Choose regions and availability zones based on cost considerations while meeting performance and compliance requirements.
Third-Party Integration: Optimize costs through strategic selection of third-party services and marketplace solutions with favorable pricing terms.
Variable Consumption Models: Implement pricing models that align costs with actual usage and business value, especially for variable and unpredictable workloads.
Best Practices
COST07-BP01: Perform pricing model analysis
Analyze different pricing models available for your workloads and select the most cost-effective options based on usage patterns, commitment levels, and business requirements.
COST07-BP02: Choose regions based on cost
Select AWS regions based on cost considerations while balancing performance, compliance, and availability requirements to optimize overall costs.
COST07-BP03: Select third-party agreements with cost-efficient terms
Choose third-party services, marketplace solutions, and vendor agreements that provide cost-efficient terms and align with your cost optimization objectives.
COST07-BP04: Implement pricing models for variable consumption
Use pricing models that align costs with actual consumption and business value, especially for workloads with variable or unpredictable usage patterns.
COST07-BP05: Implement pricing models for workload components
Apply appropriate pricing models to different workload components based on their specific characteristics, usage patterns, and cost optimization opportunities.
Implementation Strategy
1. Analyze Current Pricing Models
- Audit existing pricing models and commitments
- Analyze usage patterns and cost trends
- Identify optimization opportunities across services
- Benchmark costs against different pricing options
2. Develop Pricing Strategy
- Create comprehensive pricing model strategy
- Define commitment levels and terms
- Plan for geographic cost optimization
- Establish third-party vendor evaluation criteria
3. Implement Optimized Pricing
- Deploy Reserved Instances and Savings Plans strategically
- Implement Spot Instance usage where appropriate
- Optimize regional deployment for cost efficiency
- Negotiate favorable third-party agreements
4. Monitor and Optimize
- Track pricing model performance and savings
- Adjust commitments based on usage changes
- Continuously evaluate new pricing options
- Optimize based on business requirement changes
AWS Services to Consider
Common Anti-Patterns
Over-Committing: Purchasing too many Reserved Instances or Savings Plans without proper analysis of usage patterns and future requirements.
Ignoring Regional Pricing: Deploying resources without considering regional pricing differences and optimization opportunities.
Single Pricing Model: Relying on only one pricing model instead of using a strategic mix based on workload characteristics.
Lack of Monitoring: Not tracking pricing model performance and utilization to identify optimization opportunities.
Inflexible Commitments: Making long-term commitments without considering business changes and evolving requirements.
Success Metrics
- Cost Savings: Percentage reduction in overall AWS costs through pricing model optimization
- Commitment Utilization: Utilization rates for Reserved Instances and Savings Plans
- Pricing Model Coverage: Percentage of workloads using optimized pricing models
- Regional Cost Efficiency: Cost savings achieved through strategic regional deployment
- Third-Party Cost Optimization: Savings achieved through optimized vendor agreements