AWS pricing model

There are three fundamental drivers of cost with AWS: compute, storage, and outbound data transfer. These characteristics vary somewhat, depending on the AWS product and pricing model you choose.

1. Compute - Charged per hour/second, varies by instance

2. Storage - charged per GB

3. Data Transfer - outbound transfers are aggregated and charged per GB, inbound transfers and data transfers between services in the same AWS Region typically have no charge

In most cases, there is no charge for inbound data transfer or for data transfer between other AWS services within the same AWS Region. There are some exceptions, so be sure to verify data transfer rates before you begin to use the AWS service.

Outbound data transfer is aggregated across services and then charged at the outbound data transfer rate. This charge appears on the monthly statement as AWS Data Transfer Out.

How do you pay for AWS?

• This philosophy is what underlies AWS pricing. While the number and types of services offered by AWS have increased dramatically, our philosophy on pricing has not changed. At the end of each month, you pay for what you use. You can start or stop using a product at any time. No long-term contracts are required.

• AWS offers a range of cloud computing services. For each service, you pay for exactly the amount of resources that you actually need. This utility-style pricing model includes:

  • Pay for what you use

  • Pay less when you reserve

  • Pay less when you use more

  • Pay even less as AWS grows

Pay for what you use

• Pay only for the services that you consume, with no large upfront expenses.

• Unless you build data centers for a living, you might have spent too much time and money building them. With AWS, you pay only for the services that you consume with no large upfront expenses. You can lower variable costs, so you no longer need to dedicate valuable resources to building costly infrastructure, including purchasing servers, software licenses, or leasing facilities.

• Quickly adapt to changing business needs and redirect your focus on innovation and invention by paying only for what you use and for as long as you need it. All AWS services are available on demand, require no long-term contracts, and have no complex licensing dependencies.

Pay less when you reserve

• Invest in Reserved Instances (RIs):

  • Save up to 75 percent

  • Options:

    • All Upfront Reserved Instance (AURI) →largest discount

    • Partial Upfront Reserved Instance (PURI) →lower discounts

    • No Upfront Payments Reserved Instance (NURI) →smallest discount

Pay less by using more

Realize volume-based discounts:

• Savings as usage increases.

• Tiered pricing for services like Amazon Simple Storage Service (Amazon S3), Amazon Elastic Block Store (Amazon EBS), or Amazon Elastic File System (Amazon EFS) →the more you use, the less you pay per GB.

• Multiple storage services deliver lower storage costs based on needs.

Pay even less as AWS grows

As AWS grows:

• AWS focuses on lowering cost of doing business.

• This practice results in AWS passing savings from economies of scale to you.

• Since 2006, AWS has lowered pricing 75 times (as of September 2019).

• Future higher-performing resources replace current resources for no extra charge

Custom pricing

• Meet varying needs through custom pricing.

• Available for high-volume projects with unique requirements

AWS Free Tier

Enables you to gain free hands-on experience with the AWS platform, products, and services. Free for 1 year for new customers.

Services with no charge

• Amazon Virtual Private Cloud (Amazon VPC) enables you to provision a logically isolated section of the AWS Cloud where you can launch AWS resources in a virtual network that you define.

• AWS Identity and Access Management (IAM) controls your users’ access to AWS services and resources.

• AWS Elastic Beanstalk is an even easier way for you to quickly deploy and manage applications in the AWS Cloud.

• AWS CloudFormation gives developers and systems administrators an easy way to create a collection of related AWS resources and provision them in an orderly and predictable fashion.

• Automatic Scaling automatically adds or removes resources according to conditions you define. The resources you are using increase seamlessly during demand spikes to maintain performance and decrease automatically during demand lulls to minimize costs.

• AWS OpsWorks is an application management service that makes it easy to deploy and operate applications of all shapes and sizes.

• Consolidated Billing is a billing feature in AWS Organizations to consolidate payment for multiple AWS accounts or multiple Amazon Internet Services Private Limited (AISPL) accounts*. Consolidated billing provides:

  • One bill for multiple accounts

  • The ability to easily track each account’s charges.

  • The opportunity to decrease charges as a result of volume pricing discounts from combined usage.

  • And you can consolidate all of your accounts using Consolidated Billing and get tiered benefits

Section 2: Total Cost of Ownership

On-premises versus cloud

• On-premises infrastructure/traditional infrastructure is installed locally on a company’s own computers and servers. There are several fixed costs, also known as capital expenses, that are associated with the traditional infrastructure. Capital expenses include facilities, hardware, licenses, and maintenance staff. Scaling up can be expensive and time-consuming. Scaling down does not reduce fixed costs.

• A cloud infrastructure is purchased from a service provider who builds and maintains the facilities, hardware, and maintenance staff. A customer pays for what is used. Scaling up or down is simple. Costs are easy to estimate because they depend on service use.

What is Total Cost of Ownership (TCO)?

• Total Cost of Ownership (TCO) is the financial estimate to help identify direct and indirect costs of a system.

• CO includes the cost of a service, plus all the costs that are associated with owning the service.

• Why use TCO?

  • To compare the costs of running an entire infrastructure environment or specific workload on-premises versus on AWS

  • To budget and build the business case for moving to the cloud

TCO considerations

Some of the costs that are associated with data center management include:

• Server costs for both hardware (Server, rack chassis power distribution units (PDUs), top-of-rack (TOR) switches (and maintenance)) and software (Operating system (OS), virtualization licenses(and maintenance), and facilities costs to house the equipment.

• Storage costs for the hardware (Storage disks, storage area network (SAN) or Fibre Channel (FC) switches), storage administration costs, and facilities.

• Network costs for hardware (Local area network (LAN) switches, load balancer bandwidth costs), network administration costs, and facilities.

• And IT labor costs that are required to administer the entire solution.

Compare this process to on-premises technology. Though they are sometimes difficult to determine, calculations of in-house costs must take into account all:

• Direct costs that accompany running a server—like power, floor space, storage, and IT operations to manage those resources.

• Indirect costs of running a server, like network and storage infrastructure.

On-premises versus all-in-cloud

You could save up to 96% a year by moving your infrastructure to AWS. Your 3-year total savings would be $159,913.

AWS Pricing Calculator

• AWS offers the AWS Pricing Calculator to help you estimate a monthly AWS bill. You can use this tool to explore AWS services and create an estimate for the cost of your use cases on AWS. You can model your solutions before building them, explore the price points and calculations behind your estimate, and find the available instance types and contract terms that meet your needs. This enables you to make informed decisions about using AWS. You can plan your AWS costs and usage or price out setting up a new set of instances and services.

Use the AWS Pricing Calculator to:

• Estimate monthly costs

• Identify opportunities to reduce monthly costs

• Model your solutions before building them

• Explore price points and calculations behind your estimate

• Find the available instance types and contract terms that meet your needs

• Name your estimate and create and name groups of services

The AWS Pricing Calculator enables you to name your estimate and create and name groups of services. Groups are containers that you add services to in order to organize and build your estimate. You can organize your groups and services by cost-center, department, product architecture, etc.

AWS Pricing Calculator estimates are broken into:

• The total for your first 12 months –The total estimate for your current group and all of the services and groups in your current group. It combines the upfront and monthly estimates.

• Your total upfront –How much you are estimated to pay upfront as you set up your AWS stack.

• Your total monthly –How much you're estimated to spend every month while you run your AWS stack.

Additional benefit considerations

Hard Benefits

• Reduced spending on compute, storage, networking, security

• Reductions in hardware and software purchases (capex)

• Reductions in operational costs, backup, and disaster recovery

• Reduction in operations personnel

Cloud Total Cost of Ownership defines what will be spent on the technology after adoption—or what it costs to run the solution. Typically, a TCO analysis looks at the as-is on-premises infrastructure and compares it with the cost of the to-be infrastructure state in the cloud. While this difference might be easy to calculate, it might only provide a narrow view of the total financial impact of moving to the cloud.

A return on investment (ROI) analysis can be used to determine the value that is generated while considering spending and saving. This analysis starts by identifying the hard benefits in terms of direct and visible cost reductions and efficiency improvements.

Next, soft savings are identified. Soft savings are value points that are challenging to accurately quantify, but they can be more valuable than the hard savings. It is important for you to understand both hard and soft benefits to understand the full value of the cloud. Soft benefits include:

• Reusing service and applications that enable you to define (and redefine solutions) by using the same cloud service

• Increased developer productivity

• Improved customer satisfaction

• Agile business processes that can quickly respond to new and emerging opportunities

• Increased global reach

Section 3: AWS Organizations

Introduction to AWS Organizations

AWS Organizations is a free account management service that enables you to consolidate multiple AWS accounts into an organization that you create and centrally manage. AWS Organizations include consolidated billing and account management capabilities that help you to better meet the budgetary, security, and compliance needs of your business.

The main benefits of AWS Organizations are:

• Centrally managed access policies across multiple AWS accounts.

• Controlled access to AWS services.

• Automated AWS account creation and management.

• Consolidated billing across multiple AWS accounts.

Key features and benefits

• Create service control policies (SCPs) that centrally control AWS services across multiple AWS accounts

• Create groups of accounts and then attach policies to a group to ensure that the correct policies are applied across the accounts.

• Simplify account management by using application programming interfaces (APIs) to automate the creation and management of new AWS accounts.

• Simplify the billing process by setting up a single payment method for all the AWS accounts in your organization. With consolidated billing, you can see a combined view of charges that are incurred by all your accounts, and you can take advantage of pricing benefits from aggregated usage. Consolidated billing provides a central location to manage billing across all of your AWS accounts, and the ability to benefit from volume discounts.

Security with AWS Organizations

• Control access with AWS Identity and Access Management (IAM).

• IAM policies enable you to allow or deny access to AWS services for users, groups, and roles.

• Service control policies (SCPs) enable you to allow or deny access to AWS services for individuals or group accounts in an organizational unit (OU).

Organizations setup

• Step 1: Create Organization

• Step 2: Create organizational units

• Step 3: Create service control policies

• Step 4: Test restrictions

Limits of AWS Organizations

• Names must be composed of Unicode characters and not exceed 250 characters in length.

• List of the AWS Organizations limits, including names, number of accounts (varies), number of roots (1), number of OUs(1,000), number of policies (1,000), max size of control policy document (5,120 bytes), max nesting of BUs (5 levels of BUs under a root), invitations sent per day (20), member accounts created concurrently (5), and entities to which you can attach a policy (unlimited).

Accessing AWS Organizations

• The AWS Management Console is a browser-based interface that you can use to manage your organization and your AWS resources. You can perform any task in your organization by using the console.

• AWS Command Line Interface (AWS CLI) tools enable you to issue commands at your system's command line to perform AWS Organizations tasks and AWS tasks. This method can be faster and more convenient than using the console.

• You can use also AWS software development kits (SDKs) to handle tasks such as cryptographically signing requests, managing errors, and retrying requests automatically. AWS SDKs consist of libraries and sample code for various programming languages and platforms, such as Java, Python, Ruby, .NET, iOS, and Android.

• The AWS Organizations HTTPS Query API gives you programmatic access to AWS Organizations and AWS. You can use the API to issue HTTPS requests directly to the service. When you use the HTTPS API, you must include code to digitally sign requests by using your credentials.

Section 4: AWS Billing and Cost Management

Introducing AWS Billing and Cost Management

• AWS Billing and Cost Management is the service that you use to pay your AWS bill, monitor your usage, and budget your costs. Billing and Cost Management enables you to forecast and obtain a better idea of what your costs and usage might be in the future so that you can plan ahead.

• With the filtering and grouping functionality, you can further analyze your data using a variety of available dimensions. The AWS Cost and Usage Report Tool enables you to identify opportunities for optimization by understanding your cost and usage data trends and how you are using your AWS implementation.

AWS Billing Dashboard

• The AWS Billing Dashboard lets you view the status of your month-to-date AWS expenditure, identify the services that account for the majority of your overall expenditure, and understand at a high level how costs are trending.

• One of the graphs that is located on the dashboard is the Spend Summary. The Spend Summary shows you how much you spent last month, the estimated costs of your AWS usage for the month to date, and a forecast for how much you are likely to spend this month.

• Another graph is Month-to-Date Spend by Service, which shows the top services that you use most and the proportion of costs that are attributed to that service.

The AWS Bills page lists the costs that you incurred over the past month for each AWS service, with a further breakdown by AWS Region and linked account.

Cost Explorer Page

• The AWS Billing and Cost Management console includes the Cost Explorer page for viewing your AWS cost data as a graph.

• With Cost Explorer, you can visualize, understand, and manage your AWS costs and usage over time.

• The Cost Explorer includes a default report that visualizes your costs and usage for your top cost-incurring AWS services. The monthly running costs report gives you an overview of all your costs for the past 3 months. It also provides forecasted numbers for the coming month, with a corresponding confidence interval.

AWS Budget

• AWS Budgets uses the cost visualization that is provided by Cost Explorer to show you the status of your budgets and to provide forecasts of your estimated costs.

AWS Cost and Usage Report

• The AWS Cost and Usage Report is a single location for accessing comprehensive information about your AWS costs and usage. This tool lists the usage for each service category that is used by an account (and its users) in hourly or daily line items, and any tax that you activated for tax allocation purposes.

Section 5: Technical support

Provide unique combination of tools and expertise:

• AWS Support - was developed to provide complete support and the right resources to aid your success

• AWS Support Plans

Proactive guidance

• Technical Account Manager (TAM) - can provide guidance, architectural review, and continuous ongoing communication to keep you informed and prepared as you plan, deploy, and optimize your solutions

Best practices:

• AWS Trusted Advisor - online resource that checks for opportunities to reduce monthly expenditures and increase productivity

Account assistance:

• AWS Support Concierge - is a billing and account expert who will provide quick and efficient analysis on billing and account issues

Support plans

• Basic Support – Resource Center access, Service Health Dashboard, product FAQs, discussion forums, and support for health checks

• Developer Support: Support for early development on AWS

• Business Support: Customers that run production workloads

• Enterprise Support: Customers that run business and mission-critical workloads

Case severity and response times

• Critical – Your business is at risk. Critical functions of your application are unavailable.

• Urgent – Your business is significantly impacted. Important functions of your application are unavailable

• High – Important functions of your application are impaired or degraded

• Normal – Non-critical functions of your application are behaving abnormally, or you have a time-sensitive development question.

• Low – You have a general development question, or you want to request a feature.