1.1 The Cost Optimization Framework
Cost optimization is not about spending less — it is about eliminating waste while delivering maximum business value. AWS organizes cost optimization into five focus areas.
1.2 Right-Sizing
Right-sizing means selecting the smallest instance type that still meets your performance requirements. Most organizations over-provision by 50–75%.
AWS Compute Optimizer
- ML-based service that analyzes CloudWatch metrics (CPU, memory, network, disk) over 14+ days
- Recommends: EC2 instance type, EBS volume type/size, Lambda memory, ECS task size
- Shows projected cost savings and performance risk for each recommendation
- Enhanced recommendations: opt-in for 3-month analysis window (more accurate, paid feature)
- Integrates with Cost Explorer right-sizing recommendations
Right-Sizing Strategies by Service
1.3 Increase Elasticity
Stop paying for resources when they are not in use. Scale down during low demand and scale up during peak.
1.4 Choose the Right Pricing Model
Spot Instance Best Practices
- Use Spot Fleet or EC2 Auto Scaling with mixed instance types (diversify for availability)
- Use capacity-optimized allocation strategy (reduces interruption risk)
- Design for interruption: checkpointing, stateless architecture, SQS-driven workers
- Spot Block (deprecated) → use Spot with diversification instead
- Combine On-Demand + Spot in ASG: On-Demand for base, Spot for burst
1.5 Optimize Storage
S3 Cost Optimization
EBS Cost Optimization
- gp2 → gp3: 20% cheaper + better baseline IOPS/throughput. No performance change needed.
- Delete unattached EBS volumes (Trusted Advisor identifies these)
- Delete old snapshots no longer needed (AWS Backup lifecycle rules)
- Right-size provisioned IOPS volumes (io1/io2): reduce IOPS if not fully used
- Use Instance Store for temporary data instead of EBS (free, faster)
Database Cost Optimization
- Aurora Serverless v2: pay per ACU for variable workloads (no idle instance cost)
- RDS Reserved Instances: up to 69% off for steady databases
- DynamoDB On-Demand for spiky, Provisioned + Auto Scaling for steady
- ElastiCache Reserved Nodes: up to 55% off for steady caches
- Use read replicas to offload reads (cheaper than scaling up the primary)
1.6 Reduce Data Transfer Costs
1.7 Monitor, Alert, and Govern
Visibility Tools
Governance Guardrails
- Cost Allocation Tags: tag everything (Team, Project, Environment). Activate in Billing.
- AWS Organizations SCPs: restrict expensive services/instance types in dev accounts
- AWS Budgets Actions: auto-apply SCP or stop instances when budget exceeded
- Service Quotas: request increases proactively; avoid emergency scaling failures
- AWS Config Rules: detect non-compliant resources (e.g., unencrypted, over-provisioned)