How AWS Pricing Works: An Overview

AWS pricing optimizes your amazon cloud services consumption costs to match your needs while providing the flexibility to adjust your cloud pricing model as those needs evolve. AWS pricing is based on a pay-as-you-go model. This means that you only pay for the AWS services that you use and stop paying when you no longer use them. There are no upfront costs or long-term commitments. There are also various discounts and promotions based on who you buy from, duration of commitment and other criteria.

AWS Amazon Pricing Features

AWS Pricing Options

Direct and indirect are the two primary ways you can price and purchase AWS services like ec2, lambda, s3, DynamoDB, RDS, cloudfront, etc. While buying directly from Amazon is always an option, you could gain some pricing. support and commitment flexibility when purchasing via the indirect route.  

Fundamentals Of Pricing

Compute, storage and outbound data transfer are the 3 essential ways in which AWS prices its services. You encounter these in your billing and consumption, for example, as aws ec2 pricing, lambda pricing (compute), aws s3 pricing, backup pricing or DynamoDB pricing (storage) and AWS Data Transfer Out (outbound data transfer). These may vary across services and pricing models you choose. 

Need Based Pricing

It is important to understand that when migrating from on-prem or data center physical servers to Amazon AWS Cloud services, you are moving from a fixed cost and pricing model to a consumption or variable AWS pricing model. The best way to optimize your costs is to understand your real-time needs and closely monitor and adjust to changes in consumption thereby actively managing your cloud costs.

Pricing Models Explained

AWS Cloud services are offered through the following pricing models including AWS Free Tier, On Demand Instances, Savings Plans, Spot Instances, and Reservations. Each of these pricing models are explained below:

On Demand Instances

On-demand instances require no long term commitment nor upfront costs. Using this model enables you to consume compute and database capacity by the hour and second with a minimum of 60 seconds.

Reservations

Reservations enables you to receive up to 75% discount by paying for resources ahead of time. You can switch from on-demand to reservation at any time as long as it is the same sized resource, as reservation is a billing concept, not a specific resource being reserved.

Spot Instances

Spot instances lets you utilize spare unutilized compute capacity via a discounted aws pricing model of up to 90%. In turn, you could be evicted from the assigned resource with short notice of less than 30 seconds.

Savings Plans

Savings plans provide the flexibility via aws pricing model to avail of discounted prices on AWS services including EC2, AWS Lambda, AWS Fargate, etc. provided you commit to a $ threshold usage over a period of time, usually a one to three year commitment.

AWS Service Evaluation Pricing

For evaluation purposes AWS provides an AWS Free Tier that enables you to gain hands-on experience on over 60+ AWS services at no charge based on the offer type including 12-months free tier, always free tier and trials.

AWS Pricing Calculator

AWS pricing calculator is a free tool that helps you calculate the estimated cost to use AWS services like ec2 and s3 that constitute the particular use case you have in mind. This tool can be used both for initial migration as well as existing cloud services with the intent of either re-architecting or adjusting/optimizing AWS services.

AWS Cost Optimization

AWS offers a variety of tools to help you optimize your costs. These tools can help you track and report your cloud spend, identify areas where you can optimize your cloud costs, and make changes and suggestions to your current cloud architecture.

AWS Cost Explorer 

This tool provides a graphical view of your AWS costs over time. You can use Cost Explorer to identify trends, track your spending against budgets, and identify areas where you can save.

AWS Budgets 

This tool allows you to set budgets for your AWS costs. When you exceed a budget, you will receive an alert. This can help you avoid unexpected costs.

AWS Trusted Advisor 

This service provides recommendations for improving the performance, security, and cost-effectiveness of your AWS environment. Trusted Advisor can help you identify areas where you can save money.

Conclusion

While various AWS pricing models provide you flexibility to utilize cloud resources while optimizing costs, in general, time and price are inversely proportional in that the longer the commitment, the lower the cost of an AWS service. However you can gain pricing and commitment flexibility by evaluating all your available direct and indirect buying options.