Perform pricing model analysis at the management account level

Understanding and leveraging AWS pricing models is essential for managing costs effectively. By conducting a thorough pricing model analysis at the management account level, organizations can minimize expenses and identify opportunities for cost savings through committed use and exploration of discounts.

Best Practices

Regular Pricing Model Analysis

• Conduct a thorough analysis of pricing models available for each resource on a regular basis. This helps identify the most cost-effective options, such as On-Demand, Reserved Instances, and Savings Plans.
• Leverage AWS Cost Explorer to visualize spending patterns over time. This can assist in understanding which models yield the best savings based on usage trends.
• Set up dashboards and alerts in the AWS Billing and Cost Management Console to monitor spending and usage levels. This maintains visibility over costs and helps in making informed decisions.
• Review committed use benefits regularly to ensure you are maximizing discounts available for long-term resource commitments. This can significantly reduce costs associated with cloud resources.
• Schedule quarterly reviews of your resource utilization and costs at the management account level. Involve key stakeholders to align cloud usage with business objectives and explore potential areas for savings.

Questions to ask your team

• Have you analyzed your current usage and billing data to identify appropriate pricing models?
• Are you utilizing commitments and reservations where applicable to receive discounts?
• How often do you perform pricing model analysis at the management account level?
• What tools are you using to monitor and analyze costs?
• Have you benchmarked your costs against similar resources or services to identify savings opportunities?

Who should be doing this?

Cloud Financial Analyst

• Analyze pricing models across all resources deployed in the management account.
• Utilize billing and cost management tools to evaluate usage patterns and identify areas for potential discounts or savings.
• Regularly review and recommend suitable pricing models such as Reserved Instances or Savings Plans based on resource utilization.
• Prepare detailed reports on cost-saving opportunities and present findings to stakeholders.
• Monitor changes in resource usage and pricing models to ensure optimal cost efficiency.

Cloud Architect

• Collaborate with financial analysts to understand cost implications of architectural decisions.
• Design cloud infrastructure with cost optimization strategies in mind, leveraging appropriate pricing models.
• Implement tagging strategies to improve cost allocation and accountability for different projects and teams.
• Evaluate and optimize resource allocation based on usage and performance metrics.

IT Finance Officer

• Oversee budgeting and forecasting for cloud expenditures, ensuring alignment with business objectives.
• Work with cloud financial analysts to establish cost management policies.
• Ensure compliance with company guidelines regarding pricing model recommendations and savings commitments.
• Facilitate training and awareness sessions for stakeholders on cost optimization practices.

What evidence shows this is happening in your organization?

• Cost Analysis Report Template: A structured template for analyzing AWS spending across various accounts, including sections for identifying potential savings through reserved instances and savings plans.
• Billing Dashboard: An interactive dashboard that visualizes AWS costs and usage trends, highlighting opportunities for cost optimization based on pricing models and commitments.
• Cost Optimization Playbook: A comprehensive playbook that outlines strategies for performing cost analysis at the management account level, including steps to evaluate different pricing models and recommendations for optimizing resource costs.
• Monthly Cost Review Checklist: A checklist for monthly reviews of AWS costs, including steps to utilize billing tools, assess commitment discounts, and identify underutilized resources for savings.
• AWS Resource Pricing Model Matrix: A matrix comparing different AWS pricing models (On-Demand, Reserved Instances, Savings Plans) to help decision-makers select the most cost-effective options based on projected usage.

Cloud Services

AWS

• AWS Cost Explorer: A tool that helps visualize and analyze your AWS spending patterns over time, allowing you to identify cost-saving opportunities.
• AWS Budgets: Allows you to set custom cost and usage budgets that alert you when you exceed your thresholds, helping you manage spending more effectively.
• AWS Savings Plans: A flexible pricing model that provides significant savings on your AWS usage in exchange for a commitment to use a specific amount of resources for a one- or three-year term.

Azure

• Azure Cost Management + Billing: Provides insights into your cloud spending, enabling you to identify cost trends and potential savings through recommendations.
• Azure Reservations: Allows you to reserve resources for one or three years at reduced rates compared to pay-as-you-go pricing, optimizing costs for predictable workloads.

Google Cloud Platform

• Google Cloud Billing: Offers tools to understand your resource usage and provides pricing models, including committed use contracts to reduce costs.
• Google Cloud Savings Plans: Flexible pricing plan that lets you commit to a certain level of spend over a one- or three-year period in exchange for lower rates.

Question: How do you use pricing models to reduce cost?
Pillar: Cost Optimization (Code: COST)