DEV Community

Cover image for In-Depth Guide to AWS Cost Optimization: 10 Cloud Saving Strategies
Guille Ojeda for AWS Community Builders

Posted on • Updated on • Originally published at

In-Depth Guide to AWS Cost Optimization: 10 Cloud Saving Strategies

AWS cost optimization is crucial for organizations looking to get the most value from their cloud investments. In this comprehensive guide, we reveal 10 powerful tools and strategies that can help you reduce AWS expenses and maximize efficiency. Implement these expert tips and watch your cloud costs decrease while your business thrives.

1. Use AWS Cost Explorer for Cost-Savings Analysis

AWS Cost Explorer is an indispensable tool that helps organizations visualize and understand their AWS spending. It provides detailed insights into your cost and usage patterns and allows you to identify potential areas for cost optimization. Here's what you need to know:

  • Key Components: AWS Cost Explorer features customizable reports, advanced filtering, and grouping capabilities. It integrates with AWS Organizations for consolidated billing and cost management across multiple accounts.

  • How it Works: Analyze usage patterns, identify cost drivers, and pinpoint areas for optimization. You can create custom reports, filter data by service, region, and other dimensions, and group costs by tags or other metadata.

  • Use Cases: Use AWS Cost Explorer to identify cost-saving opportunities and make data-driven decisions. For example, track Reserved Instance (RI) utilization, analyze data transfer costs, or monitor storage usage across different S3 storage classes.

  • Advantages: Gain visibility into spending trends, spot inefficiencies, and forecast future expenses. AWS Cost Explorer also helps you identify cost anomalies and prevent budget overruns.

  • Disadvantages: It may require some time investment to understand and interpret the data fully. Additionally, it doesn't provide real-time cost data, as it takes up to 24 hours for new data to appear.

  • Tips: Export your Cost Explorer data to a CSV file for further analysis and integration with other tools. Use AWS Organizations to consolidate billing data and manage costs across multiple accounts effectively.

2. Choose the Right Storage Solution

AWS offers multiple storage services, and choosing the right storage solution in AWS can be difficult.

Let's take S3 as an example. AWS S3 offers several storage classes to cater to various performance requirements and access patterns. Selecting the right storage class can significantly reduce costs. Here's what you need to know:

  • Storage Classes Overview: Amazon S3 provides storage classes such as S3 Standard, S3 One Zone-Infrequent Access, S3 Intelligent-Tiering, S3 Glacier, and S3 Glacier Deep Archive. Each storage class has different performance characteristics, access times, and costs, catering to different data access frequency and retrieval speed requirements.

  • How to Choose: Evaluate your data's access frequency, retrieval speed requirements, and durability needs. Infrequently accessed data can be stored in S3 One Zone-Infrequent Access, S3 Glacier, or S3 Glacier Deep Archive for cost savings. Frequently accessed data should be stored in S3 Standard or S3 Intelligent-Tiering, which automatically moves objects between frequent and infrequent access tiers based on changing access patterns.

  • Use Cases: Store backup data, log files, or archives in infrequent access or archival storage classes to optimize costs. Keep frequently accessed data, like website content or big data analytics input, in the S3 Standard or S3 Intelligent-Tiering storage classes for better performance.

  • Advantages: Optimize storage costs and performance by choosing the most cost-effective storage class for each dataset. This can result in significant savings, especially for large or growing data stores.

  • Disadvantages: Requires regular monitoring to ensure the storage class still meets your needs. Data retrieval from archival storage classes, such as S3 Glacier and S3 Glacier Deep Archive, can be slow and expensive.

  • Tips: Use Amazon S3 Inventory to audit your object metadata and transition objects between storage classes using S3 Lifecycle policies. Consider the S3 Intelligent-Tiering storage class for automatic cost optimization without manual intervention.

3. Implement AWS Auto Scaling

Auto Scaling allows you to automatically adjust your AWS resources based on actual demand, helping you optimize costs while maintaining performance. Here's what you need to know:

  • Key Components: AWS Auto Scaling, scaling policies, and Amazon CloudWatch alarms.

  • How it Works: Auto Scaling monitors your applications and automatically adjusts capacity to maintain steady, predictable performance at the lowest possible cost. It uses scaling policies and CloudWatch alarms to determine when to scale in or out based on predefined thresholds or target values.

  • Use Cases: Scale Amazon EC2 instances, Amazon RDS instances, and other AWS resources to match fluctuating workloads. For example, scale out web servers during peak traffic times and scale in during periods of low traffic.

  • Advantages: Pay only for the resources you need, when you need them, and maintain optimal performance. Auto Scaling enables you to handle unexpected traffic spikes without manual intervention.

  • Disadvantages: Requires proper configuration and monitoring to ensure the desired results. Improper configuration can lead to increased costs or reduced performance.

  • Tips: Use predictive scaling to forecast future resource needs and proactively scale resources. Combine Auto Scaling with load balancing for optimal distribution of traffic across instances.

4. Adopt a Serverless Architecture with AWS Lambda

Serverless computing with AWS Lambda eliminates the need to provision and manage servers, allowing you to focus on your code. Here's what you need to know:

  • Key Components: AWS Lambda, Lambda functions, and event triggers.

  • How it Works: Write and deploy your code as Lambda functions, which are automatically triggered by AWS services, such as Amazon S3, Amazon DynamoDB, or custom application events. Lambda automatically scales your application by running code in response to each trigger, adjusting the number of concurrent executions based on incoming request rates.

  • Use Cases: Build applications with microservices, process files uploaded to Amazon S3, perform real-time data processing, and create custom backends for mobile and web applications.

  • Advantages: Pay only for the compute time you consume, reducing operational overhead. Lambda enables you to scale your applications without worrying about provisioning or managing servers.

  • Disadvantages: Limited control over the underlying infrastructure, which may be unsuitable for certain applications. Additionally, Lambda functions have a maximum execution time of 15 minutes, which may not be suitable for long-running tasks.

  • Tips: Use AWS Step Functions to coordinate complex workflows involving multiple Lambda functions. Monitor your Lambda functions with Amazon CloudWatch and use AWS X-Ray for distributed tracing and performance analysis. View our guide to optimizing AWS Lambda costs.

Master AWS with Real Solutions and Best Practices. Subscribe to the free newsletter Simple AWS. 3000 engineers and tech experts already have.

5. Optimize Data Transfer and Bandwidth Usage

Data transfer costs can be a significant contributor to your AWS bill. Optimizing data transfer and bandwidth usage can result in cost savings. Here's what you need to know:

  • Key Components: Amazon CloudFront, AWS Direct Connect, and Amazon S3 Transfer Acceleration.

  • How it Works: Optimize data transfer by utilizing Amazon CloudFront, a global content delivery network (CDN) that caches and delivers content from edge locations closer to your users. AWS Direct Connect provides a dedicated network connection between your on-premises data centers and AWS, reducing data transfer costs and latency.

  • Use Cases: Improve the performance and reduce the costs of distributing content to end-users, such as website assets, video streaming, and API responses. Use AWS Direct Connect to securely transfer large volumes of data between your on-premises infrastructure and AWS, or to establish a hybrid cloud environment.

  • Advantages: Reduce data transfer costs, improve content delivery performance, and decrease latency. CloudFront provides built-in security features, like DDoS protection and data encryption.

  • Disadvantages: Requires proper configuration and monitoring to ensure optimal performance and cost savings. Additional costs may be incurred for using CloudFront or Direct Connect.

  • Tips: Use Amazon S3 Transfer Acceleration to speed up transfers of large files over the public internet to Amazon S3. Implement caching strategies and compress content to further optimize data transfer and bandwidth usage.

6. Rightsize Your EC2 Instances and Use Reserved Instances

Regularly review your instances and rightsize them based on your actual usage to eliminate over-provisioning. Here's what you need to know:

  • Rightsizing: Utilize AWS Compute Optimizer to analyze historical data and provide recommendations for rightsizing instances. Review CPU, memory, and network usage to identify underutilized or overprovisioned instances.

  • Reserved Instances (RIs): Purchase RIs for predictable, long-term workloads to benefit from significant discounts compared to On-Demand pricing. RIs are available for various AWS services, such as EC2, RDS, and ElastiCache.

  • Use Cases: Optimize costs for steady-state, predictable workloads, or workloads with consistent usage patterns.

  • Advantages: Save up to 75% on compute costs compared to On-Demand pricing. RIs provide cost predictability and help you commit to specific instance types and regions.

  • Disadvantages: RIs require an upfront commitment for a 1-year or 3-year term, which may not be suitable for all workloads or budgets. Inflexible RIs may result in underutilized resources if your workloads change significantly.

  • Tips: Use AWS Savings Plans as an alternative to RIs, which offer similar cost savings but with greater flexibility. Regularly monitor your RI utilization and modify or exchange RIs as needed to match your changing workloads.

7. Use Spot Instances for Flexible Workloads

Spot Instances offer a cost-effective alternative to On-Demand instances, allowing you to bid on unused AWS capacity at a fraction of the cost. Here's what you need to know:

  • How it Works: Bid on unused EC2 capacity at a discount of up to 90% compared to On-Demand pricing. Spot Instances are ideal for fault-tolerant, flexible workloads that can withstand interruptions.

  • Use Cases: Run batch jobs, big data analytics, or test and development environments that can tolerate interruptions and don't require strict availability guarantees.

  • Advantages: Save up to 90% on compute costs, making Spot Instances an economical choice for suitable workloads.

  • Disadvantages: Spot Instances can be terminated with short notice if AWS needs the capacity or if your bid price is below the current Spot price. They may not be suitable for mission-critical or time-sensitive applications.

  • Tips: Use Spot Fleet to launch and manage a collection of Spot Instances with a single request. Implement strategies like capacity-optimized allocation or diversified instance types to reduce the risk of interruptions and improve the availability of your Spot Instances.

8. Employ AWS Budgets and Cost Allocation Tags

AWS Budgets enable you to set custom cost and usage budgets, helping you stay within your financial limits. Here's what you need to know:

  • AWS Budgets: Set custom cost and usage budgets based on your requirements. Receive alerts when your spending approaches or exceeds your defined thresholds.

  • Cost Allocation Tags: Use cost allocation tags to categorize resources and gain better visibility into your AWS costs. Assign tags to resources like EC2 instances, S3 buckets, and Lambda functions to track spending by project, department, or any custom category.

  • Use Cases: Monitor and control your AWS spending, allocate costs to different teams, projects, or environments, and improve financial planning and forecasting.

  • Advantages: Gain granular insights into your AWS costs, improve cost management, and ensure accountability across your organization. AWS Budgets helps you proactively manage your cloud expenses and prevent cost overruns.

  • Disadvantages: Requires ongoing maintenance and monitoring to ensure accurate and up-to-date cost tracking. Inconsistent or incomplete tagging can result in inaccurate cost allocation.

  • Tips: Define a consistent tagging strategy across your organization, and automate tag enforcement using tools like AWS Organizations and AWS Config. Use AWS Cost Categories to group your costs into custom categories, simplifying cost allocation and analysis.

9. Leverage AWS Trusted Advisor for Best Practices

AWS Trusted Advisor is a powerful resource that provides real-time guidance on cost optimization, security, and performance best practices. Here's what you need to know:

  • How it Works: Trusted Advisor performs checks on your AWS environment and provides recommendations based on AWS best practices. The Cost Optimization checks help identify underutilized resources, overprovisioned instances, and other opportunities to reduce costs.

  • Use Cases: Improve cost efficiency, enhance security, boost performance, and ensure fault tolerance in your AWS environment.

  • Advantages: Identify cost-saving opportunities and optimize your AWS environment based on expert recommendations. Trusted Advisor also offers guidance on security, performance, and fault tolerance, ensuring a well-rounded approach to cloud management.

  • Disadvantages: Some Trusted Advisor checks and features are only available with a Business or Enterprise Support plan, which may not be cost-effective for all organizations.

  • Tips: Regularly review Trusted Advisor recommendations and implement changes to optimize your AWS environment. Set up email notifications for new Trusted Advisor findings to stay informed and address issues promptly.

10. Implement practices from the Well-Architected Framework

Adopting the AWS Well-Architected Framework helps ensure your infrastructure is designed and operated efficiently. Here's what you need to know:

  • Key Components: The Well-Architected Framework consists of five pillars: Operational Excellence, Security, Reliability, Performance Efficiency, and Cost Optimization.

  • How it Works: The framework provides a set of best practices, design principles, and questions to help you build and maintain a well-architected AWS environment. The Cost Optimization pillar focuses on eliminating unneeded resources, rightsizing instances, and optimizing your AWS environment.

  • Use Cases: Design, build, and maintain a cost-efficient, secure, and high-performing AWS infrastructure. Apply the Well-Architected Framework to new projects or review existing architectures for improvement opportunities.

  • Advantages: Minimize costs and maximize the value of your AWS investment. Improve your overall cloud infrastructure by addressing all five pillars of the Well-Architected Framework.

  • Disadvantages: Implementing the framework requires time and effort, and may necessitate changes to existing infrastructure or processes.

  • Tips: Use the AWS Well-Architected Tool to assess your workloads against the framework's best practices and receive improvement recommendations. Engage an AWS Well-Architected Partner for expert guidance and assistance in implementing the framework.


Optimizing AWS costs is an ongoing process that requires a proactive approach, regular monitoring, and strategic planning. By diving deeper into these 10 expert strategies and leveraging the powerful tools and resources available to you, you can effectively reduce your AWS expenses, boost efficiency, and make the most of your cloud investment.

Stay ahead of the curve by continuously improving your AWS infrastructure and keeping up to date about new features and cost-optimization best practices for AWS. Additionally, make sure you use AWS cost-optimization tools to aid you in your cost-optimization efforts. By implementing these strategies and maintaining a thorough understanding of your organization's AWS usage, you can successfully minimize costs, maximize performance, and ensure the long-term success of your cloud-based infrastructure.

Master AWS with Real Solutions and Best Practices.

Join over 3000 devs, tech leads, and experts learning real AWS solutions with the Simple AWS newsletter.

  • Analyze real-world scenarios

  • Learn the why behind every solution

  • Get best practices to scale and secure them

Simple AWS is free. Start mastering AWS!

If you'd like to know more about me, you can find me on LinkedIn or at

Top comments (0)