Module 2+3

Cloud economics and billing (Module 2)

The topic that explains how cloud pricing works, how billing works, and how to estimate and manage cloud costs.

Traditional on-premises cost model

Usually requires large up-front hardware purchases, longer procurement time, and ongoing costs like power, maintenance, and staffing.

Cloud cost model

Converts large up-front costs into pay-as-you-use costs and allows fast scaling without buying extra hardware “just in case.”

Capital expense

A large up-front cost to buy equipment or build a data center.

Operational expense

Ongoing costs paid over time based on usage, like a monthly bill.

Variable expense in the cloud

You can spend more when you need more resources and spend less when demand drops.

Economies of scale

The cloud provider’s massive size lowers the cost per unit and passes some savings to customers.

Stop guessing capacity

Cloud resources can scale up or down so you do not need to over-buy for future growth.

Speed and agility benefit

Cloud lets you test ideas and deploy faster because resources can be created quickly.

Stop running data centers benefit

The cloud provider manages the data center operations, so customers do not maintain physical servers.

Go global in minutes benefit

You can deploy services in different geographic areas without building new facilities.

Three main pricing factors

Compute time, storage, and data transfer.

Compute time pricing

Charges based on how long a compute resource runs, such as per second or per hour.

Storage pricing

Charges based on how much data you store and how long you store it.

Data transfer pricing

Charges based on how much data moves between services or out of the cloud.

Inbound data transfer in AWS

In many cases, data transfer into AWS is free.

Outbound data transfer in AWS

Data transfer out of AWS may cost money depending on service and amount.

AWS Free Tier purpose

Helps new customers try services with limited free usage.

AWS Free Tier time limit for many services

Some offerings provide 12 months of limited free usage for new customers.

Always free services in Free Tier

Some services have limited usage that is always free, but you must stay within the limits.

Why monitoring Free Tier usage matters

If you exceed Free Tier limits, you can be charged.

AWS Pricing Calculator

Used before deployment to estimate monthly costs based on chosen services and expected usage.

AWS Cost Explorer

Used after deployment to view and analyze spending trends over time.

AWS Budgets

Used to set spending or usage limits and receive alerts when thresholds are reached.

AWS Billing Dashboard

Shows overall billing and spending summaries for the account, including linked accounts.

AWS Cost and Usage Report

A detailed report that breaks down charges by service and resource usage.

AWS Organizations

Puts multiple AWS accounts under one organization so they can be managed centrally.

Why AWS Organizations is useful

Helps group accounts by department or function and apply policies across accounts.

Consolidated billing

Combines charges from multiple accounts into a single bill and can share discounts across accounts.

On-Demand pricing

Pay for compute by the second or hour with no long-term commitment, good for short-term or unpredictable workloads.

Savings Plans pricing discount

Provides discounted rates when you commit to consistent usage for 1 or 3 years.

Reserved Instances pricing discount

Provides discounts when you commit to a specific instance type for a longer term.

Spot Instances pricing

Uses spare capacity for large discounts but can be interrupted, best for flexible workloads.

Dedicated Hosts

Physical servers dedicated to one customer, often used for compliance or licensing needs.

Total Cost of Ownership

Compares the full cost of running on-premises versus in the cloud.

What Total Cost of Ownership includes

Hardware, software, facilities, power, cooling, physical security, staffing, downtime, and maintenance.

Total Cost of Ownership Calculator

A tool to estimate potential savings when migrating from on-premises to AWS.

Module 2 key takeaway

AWS billing is usage-based, you pay for what you use, and cost tools help you estimate and control spending.

Global infrastructure and reliability (Module 3)

The topic that explains how AWS is organized worldwide for reliability, performance, and scalability.

Region

A geographic area where AWS services run, designed to be separate from other regions.

Availability Zone

One or more physically separate data centers inside a region with independent power, cooling, and networking.

Edge Location

A site used to deliver cached content close to users to reduce delay and improve performance.

Local Zone

An extension of a region that places select services closer to large population or industry centers.

Wavelength Zone

Infrastructure that supports ultra-low latency applications using 5G networks.

Outposts

AWS infrastructure placed on-premises to support hybrid use cases.

Why multiple Availability Zones exist in a region

To reduce single points of failure and improve high availability.

High availability

Designing systems to keep running even when some components fail.

Fault tolerance

The ability to continue operating with no interruption even if one or more components fail.

Disaster recovery

Strategies and processes to restore systems after major failures or outages.

Backup and restore disaster recovery

The lowest cost approach, usually the slowest recovery, restores systems from backups after an event.

Pilot light disaster recovery

Critical components run continuously while the rest can be started during recovery.

Warm standby disaster recovery

A smaller version of the full environment runs continuously and scales up during recovery.

Multi-site active active disaster recovery

Full environments run in multiple regions for the fastest recovery but the highest cost.

Durability in AWS

How well data is protected from loss, often helped by replication.

How AWS increases durability

Data can be replicated automatically between availability zones for protection against failures.

Why regions are isolated

To help limit the impact of failures and reduce the chance of widespread outages.

How to choose a region

Key factors include compliance and data residency, user proximity for lower latency, cost differences, and service availability.

Latency

The delay between a user request and the response, often reduced by choosing closer regions or using edge services.

Amazon CloudFront

Uses edge locations to cache content near users for lower latency.

AWS Global Accelerator

Routes traffic through the AWS global network to improve performance and reliability.

AWS Direct Connect

A private dedicated connection between your network and AWS for consistent performance and security.

Elasticity

Automatically adjusts capacity up or down based on demand.

Scalability

The ability to handle increased demand by adding resources.

Vertical scaling

Changing one resource to be larger or smaller, such as adding more memory or processing power.

Horizontal scaling

Adding or removing multiple resources, such as adding more servers to handle traffic.

Auto Scaling

A service that automatically adds or removes compute capacity based on demand.

Elastic Load Balancing

Distributes traffic across multiple targets to improve availability and support scaling.

Shared responsibility for availability

AWS provides resilient infrastructure, while customers design applications to use multiple zones, backups, and recovery planning.