It is hard to imagine running your business without data processing and computing power. However, not all businesses can afford expensive hardware and software. This has led many startups and small to medium-sized companies to use cloud infrastructure. While this offers flexibility and scalability, it can also make costs unpredictable.
This is particularly true for businesses with fluctuating workloads. Cloud costs can become a significant expense, similar to payroll or office rent.
To control cloud costs, businesses can use cloud cost optimization strategies. These strategies help manage cloud resources efficiently, reducing waste and aligning spending with business goals.
This guide will show you practical ways to optimize cloud costs without sacrificing performance or security. Let’s get started.
Identify and Manage Unused Resources
Mismanaged resources are those that you still pay for, but are not using. In cloud environments, this can happen easily with things like unused storage, inactive load balancers, or servers that are no longer needed.
For example, you might create a temporary server for testing and forget to turn off its storage afterward. This wastes resources and increases costs, since you’re paying for things you don’t use.
To avoid this, regularly check your Azure and Amazon Web Services (AWS) bills for any old or unused resources. If you find charges for items you no longer need, delete them to save money.
If you’re a developer, it’s also important to keep your testing (or “sandbox”) environments tidy. Make sure to turn off or clean up any test servers or instances you create once you’re done with them.
In addition to removing unused resources, you can reduce costs by combining smaller tasks into fewer servers or instances. This helps you make the most of what you’re paying for.
Understand Your Cloud Bill
Understand the details of your cloud bill. Don’t just look at the total—know what each charge means so you can see where your money is going.
Although the structure of cloud bill may vary based on your location, here are key areas to understand in your bill:
- Compute Costs:
Charges for the processing power based on the type and size of virtual machines used. Costs can vary by region, on-demand versus reserved instances, or spot instances.
- Managed Services Costs:
Fees for using managed services like databases, charged by usage or hourly rates.
- Storage Costs:
Costs for storing data, which depend on the storage type, redundancy options, and data transfer fees.
- Bandwidth Costs:
Charges for data transfers in and out of your cloud, including “egress costs” for moving data to the internet or between regions.
- Support Costs:
Fees for support plans, depending on the provider and plan.
- Discounts and Savings:
Reductions from upfront payments, reserved instances, or contracts that lower your total bill.
Choose a Cloud Provider with Clear Pricing
Select a cloud provider with straightforward pricing to avoid unexpected costs and simplify budgeting.
Look for providers that offer detailed usage breakdowns and transparent pricing, helping you understand your bill and spot ways to save.
This approach keeps costs predictable and manageable.
Use Cost Monitoring Tools
To effectively manage cloud costs, it’s essential to use the right monitoring tools.
For AWS, tools like AWS Cost Explorer help analyze past spending and forecast future costs, while AWS Budgets can set alerts and automatically limit resources to control spending.
Microsoft users can utilize Azure Cost Management + Billing to track expenses, forecast bills, and receive alerts. Similarly, Google Cloud users can rely on Google Cost Management to monitor costs, identify spikes, and set up spending reports.
In addition to these built-in tools, third-party options like CloudCheckr, CloudZero, and Densify offer cost-tracking and optimization recommendations across multiple cloud platforms.
(Note: Please check the availability of these tools for your location.)
Run Workloads in Cheaper Regions
Cloud costs can vary by region and demand. Running workloads in regions with lower demand and pricing can help save money, as long as the storage supports these locations. The only downside may be a slight increase in latency. However, be aware of security and compliance requirements that may restrict running workloads in certain areas.
Many organizations also use a multi-cloud strategy to manage costs. For example, they might run tasks like software testing or development on a different cloud platform if it’s more cost-effective.
Consider Support Costs
Cloud support costs are often overlooked. Premium plans with dedicated contacts offer reassurance but can add to your bill. If you rarely need support, think about switching to a basic plan, negotiating a long-term deal, or dropping premium support. A strong SLA might be more valuable, as major outages usually can’t be fixed by frontline staff.
Reduce Data Transfer Costs
Moving data in and out of public clouds can be pricey due to data egress fees. To save money, avoid unnecessary transfers.
Check your cloud provider’s fees and adjust your setup to reduce data movement. For instance, consider moving on-premises apps that often access cloud data to the cloud itself.
Also, compare the costs of different transfer options. Look at dedicated connections like AWS Direct Connect, Google Cloud Interconnect, or Azure ExpressRoute versus physical transfer devices like AWS Snowball or Azure Data Box.
Set Clear Budgets
To control costs, make sure everyone understands the project’s goals and budget. Don’t pick random numbers. Instead, encourage communication between engineering, product, and leadership teams to align on cost needs.
Consider factors like product packaging and delivery—whether it’s a free trial or enterprise plan. Use these factors as tradeoffs during planning alongside speed and reliability requirements.
Establish a monthly budget based on your organization’s needs. This budget is key to managing spending and optimizing costs effectively.
The Bottom Line
Cloud cost optimization is key to managing cloud operations. As you use the cloud more, you may end up with extra, oversized, or misconfigured resources that increase your bill without benefiting your organization.
By following the best practices for cloud cost optimization mentioned here, you can predict costs, identify their sources, and make smart changes to improve your cloud return on investment (ROI). Remember, effective cost management starts with clearly understanding where your costs are coming from before making any adjustments.