How to Control Your Cloud Costs

As your business continues to grow, so will your cloud infrastructure needs, and subsequent cloud cost. More developers, means more environments, more deployments, more data storage and so forth. When you’re in the hyper-growth mode it’s easy to lose track of your cloud usage. With engineering teams needing to be as agile as possible and not wanting to get bogged down with process.

Fortunately, there are ways to get your cloud costs under control. Empowered with tools and best practices you can ensure that you have a handle on your cloud costs. Keep an eye on the potential hidden costs. Don’t let the operational costs of the cloud get out of control and chew up your profit margins!

What is Cloud Cost Management?

Cloud cost management is the process of monitoring, controlling, and optimizing the costs of using cloud computing services. It involves identifying the different costs associated with your cloud environment. Such as the cost of compute, storage, and networking resources, and finding ways to reduce or manage those costs.

Cloud cost management involves a range of activities and strategies. Including choosing the appropriate pricing model for your workload, monitoring your usage and setting alerts or thresholds, using automation and other tools to optimize your cloud usage, and negotiating with your cloud provider for discounts and other cost savings.

The goal of cloud cost management is to ensure that you are getting the most value from your cloud investment, and to avoid overspending or wasting resources on unnecessary or unused services. By effectively managing your cloud costs, you can reduce your overall cloud spending and maximize the benefits of using cloud computing.

Why Cloud Costs are Increasing?

Cloud costs are increasing for a variety of reasons. One reason is that the demand for cloud services is growing rapidly, as more and more businesses and organizations are adopting cloud computing to support their operations. This increased demand is leading to higher prices for cloud services.

Another reason for the increase in cloud costs is the increasing complexity of cloud environments. As businesses and organizations move more of their workloads to the cloud, they are using a wider range of services and technologies, which can drive up costs. For example, using multiple cloud providers, or using advanced services such as machine learning and data analytics, can increase the cost of your cloud environment.

How to Manage your Cloud Cost

To control cloud costs, you can use the following strategies:

Finding the right pricing model

Choose the appropriate pricing model for your workload. If you have a workload that only needs to run during certain times of the day, you can use the “reserved instances” pricing model to pay a lower hourly rate in exchange for a commitment to use the service for a certain amount of time. You can also use the “spot instances” pricing model to bid on spare computing capacity and save money on your cloud costs.

Here’s a brief look at the different types of pricing models:

1. Pay-as-you-go: This pricing model allows you to pay for the cloud resources you use on an hourly or monthly basis, without any long-term commitments or upfront costs. This is a flexible and scalable pricing model that can be useful for workloads with unpredictable or fluctuating demand.
2. Reserved instances: This pricing model allows you to pay a lower hourly rate in exchange for a commitment to use the service for a certain amount of time. This can be useful for workloads with a predictable or stable usage pattern, as it can provide cost savings compared to the pay-as-you-go pricing model.
3. Spot instances: This pricing model allows you to bid on spare computing capacity, and pay a lower price for that capacity. This can be useful for workloads that can tolerate interruptions, or for applications that require a large amount of compute power for a short period of time.
4. Dedicated instances: This pricing model allows you to rent dedicated physical servers or bare metal instances from the cloud provider. This can be useful for workloads that require a high level of performance, security, or compliance, or for workloads that cannot be run on shared infrastructure.
5. Hybrid cloud: This pricing model allows you to use a combination of on-premises and cloud resources, and pay for each type of resource separately. This can be useful for workloads that require a mix of on-premises and cloud resources, or for organizations that want to gradually migrate to the cloud.

Get visibility through monitoring

Monitor your usage and set alerts or thresholds to notify you when you are approaching or exceeding your budget. Many cloud providers offer tools and services to help you monitor and manage your cloud costs. For example, AWS provides the AWS Cost Explorer and the AWS Budgets service, which allow you to view your current and projected costs and set custom alerts and budgets.

Get visibility of these metrics to get a full picture of your cloud costs:

1. Total cost of ownership (TCO): This metric measures the total cost of using cloud services, including the cost of the cloud resources themselves, as well as the cost of supporting and managing those resources. This can help you understand the overall cost of your cloud environment, and can be useful for comparing the cost of using cloud services to the cost of using on-premises resources.
2. Cost per hour: This metric measures the cost of using cloud resources on an hourly basis, and can be useful for comparing the cost of different instance types or storage sizes. This can help you understand the hourly cost of running your workload, and can be useful for determining the optimal pricing model for your workload.
3. Cost per gigabyte: This metric measures the cost of storing data in the cloud, and can be useful for comparing the cost of different storage options. This can help you understand the cost of storing data in the cloud, and can be useful for determining the optimal storage strategy for your workload.
4. Cost per transaction: This metric measures the cost of processing transactions or requests in the cloud, and can be useful for comparing the cost of different services or workloads. This can help you understand the cost of running your workload, and can be useful for determining the optimal scaling and performance strategy for your workload.

Governance and Policies

You can use governance and policies to control cloud costs by establishing rules, standards, and processes for managing your cloud environment. This can help you ensure that your cloud resources are being used efficiently and effectively, and can help you avoid overspending or wasting resources on unnecessary or unused services.

To use governance and policies to control cloud costs, you can do the following:

1. Establish clear policies and standards for your cloud environment, such as guidelines for choosing the appropriate pricing model, choosing the right type and size of cloud resources, and managing resource usage and allocation.
2. Implement governance processes and controls to ensure that your policies and standards are being followed. This can include activities such as monitoring and reporting on resource usage, setting alerts and thresholds for budget and usage, and conducting audits and reviews to identify areas for improvement.
3. Use tools and automation to enforce your policies and standards. For example, you can use cloud management platforms and services, such as AWS Control Tower and Azure Policy, to define and enforce rules for your cloud environment. You can also use tools such as AWS CloudFormation and Azure Resource Manager to automate the deployment and management of your cloud resources, and ensure that they are being used according to your policies and standards.
4. Collaborate and communicate with your team and stakeholders to ensure that everyone is aware of your policies and standards, and understands their role in managing and controlling cloud costs. This can include activities such as training, education, and outreach to ensure that everyone is on the same page when it comes to managing your cloud environment.

Right-size your resources

To right-size cloud resources for cost efficiency, you need to match the size and type of your cloud resources to the needs of your workload. This means choosing the appropriate instance type, storage size, and other resources to support your workload, without overprovisioning or underprovisioning.

To right-size your cloud resources, you can do the following:

1. Identify the workloads and applications that you are running in the cloud, and determine their resource requirements. This can include factors such as the CPU, memory, and storage requirements of your workload, as well as any specific performance or scalability needs.
2. Choose the appropriate instance type, storage size, and other resources to support your workload. You can use tools and services such as AWS EC2 Instance Advisor and Azure Virtual Machine Advisor to help you select the right resources for your workload.
3. Monitor the performance and usage of your cloud resources to determine whether they are being used efficiently and effectively. You can use tools and services such as AWS CloudWatch and Azure Monitor to track the utilization and performance of your resources, and identify areas where you may be able to reduce your costs by right-sizing your resources.
4. Adjust the size and type of your cloud resources as needed to match the changing needs of your workload. For example, you can use autoscaling to automatically scale your resources up or down based on the demand for your workload, or you can manually adjust the size of your resources to match the current needs of your workload.

Leveraging Tools to Control Cloud Cost

There are many different cloud cost management tools available, and the best one for you will depend on your specific needs and requirements. Here are some popular options:

1. AWS Cost Explorer: This tool, provided by Amazon Web Services (AWS), allows you to view your current and projected costs, and create custom reports and charts to gain insights into your cloud spending.
2. Azure Cost Management: This tool, provided by Microsoft Azure, allows you to track and optimize your cloud costs across all Azure services, and provides detailed reports and alerts to help you manage your spending.
3. GCP Cost Management: This tool, provided by Google Cloud Platform (GCP), allows you to monitor and manage your cloud costs in real-time, and provides features such as budget alerts and cost breakdowns to help you control your spending.
4. Cloudability: This is a third-party cloud cost management tool that supports multiple cloud providers, including AWS, Azure, and GCP. It offers features such as cost optimization recommendations, cost allocation and reporting, and real-time alerts to help you manage your cloud costs.
5. CloudCheckr: This is another third-party cloud cost management tool that supports multiple cloud providers, including AWS, Azure, and GCP. It offers features such as cost optimization recommendations, cost allocation and reporting, and real-time alerts to help you manage your cloud costs.

Find out our recommendations for the best cloud cost control tools here.

Whether you’re a 10-person startup or a 10,000-person enterprise, cloud costs can take up a significant portion of your overall operating costs. Ensure that your costs don’t spiral by putting tools and processes in place a the beginning of your cloud journey.