How does AWS pricing work?Amazon Web Services cloud cost guide

Amazon Web Services (AWS) is one of the largest and most comprehensive cloud platforms in the world. It offers more than 200 different services, including storage, virtual machines, database services, analytics tools, and artificial intelligence technologies. With such a wide range of offerings, it becomes crucial for businesses to understand the AWS pricing model, which determines how much they will pay for using cloud resources. In this article, we take a look at how AWS pricing works, its key principles, and the optimization opportunities it offers.

The basic principles of AWS pricing

The AWS pricing model is based on simple but flexible principles that adapt to your needs. This allows businesses of all sizes to manage costs effectively and avoid unnecessary expenditures. The main principles that guide AWS pricing are:

1. Pay-as-you-go (pay-as-you-go)
2. With AWS, you only pay for the resources you use. This does not require long-term contracts or upfront investment, which is particularly beneficial for companies that are new to the cloud or have fluctuating IT resource needs.
3. No minimum fees or commitments
4. AWS allows you the flexibility to use your services - you can opt-out at any time without financial penalties. This is particularly important for pilot projects or test environments, where accurate cost forecasting is difficult.
5. Reduce costs as you grow
6. The more you use AWS resources, the less you will pay per unit of those resources. This discount mechanism allows large companies to significantly reduce costs as they scale up.

The elements that make up AWS pricing

Each AWS service has its own pricing model that takes into account the specifics of the solution. Here is an overview of the key elements that affect AWS pricing:

1. Data storage (Amazon S3, EBS, Glacier)

Data storage services are billed based on:

• The amount of data stored (GB or TB per month),
• Data operations (e.g. reads and writes),
• The region in which the data is stored (different AWS regions have different rates).

Amazon S3 offers different storage classes, such as S3 Standard, S3 Intelligent-Tiering or S3 Glacier. Each of these classes has different costs, tailored to the specific use - from fast access to archiving.

1. Computing (Amazon EC2, Lambda)

The costs of computing services mainly depend on:

• The type of compute instance (e.g. standard, memory-optimised or CPU-optimised),
• The runtime of the instance (billed in hours or seconds),
• Purchase option - AWS offers On-Demand, Reserved Instances and Spot Instances models, which vary in cost and flexibility.

It is worth mentioning that with AWS Lambda, billing is based on the number of function calls and their runtime, optimising costs in serverless applications.

1. Data transfer

Data transfer costs are charged for Outbound Data Transfer. Internal data transfer between AWS services in the same region is usually free, but transfer between regions may incur additional costs.

1. Database services (Amazon RDS, DynamoDB)

Database costs depend on:

• The type of database chosen (e.g. SQL, NoSQL),
• The size of the instance and the amount of data stored,
• IOPS operations and any backups.

How do you optimise costs in AWS?

Understanding AWS pricing is key to effectively managing costs in the cloud. There are several proven methods to help minimise expenses:

1. Using the Reserved Instances model
2. If you plan to use specific resources for the long term, reserving instances can reduce costs by up to 75% compared to the On-Demand model.
3. Analysing resource usage
4. AWS offers tools such as AWS Cost Explorer or AWS Trusted Advisor, which help you monitor and analyse your expenditure. With these, you can identify unused or under-utilised resources.
5. Auto Scaling
6. Services such as Auto Scaling and AWS Lambda, adjust the amount of resources according to your current needs. This avoids excess costs during periods of lower load.
7. Selecting the right regions
8. AWS costs vary by region. By choosing a region with lower rates, you can save a significant amount of budget.
9. Using the AWS free tier (AWS Free Tier)
10. AWS offers a free tier available for 12 months for new users. It allows you to test most services at no cost.

AWS calculation example

To better understand how AWS pricing works, let's consider an example of a simple project that requires:

• Storing 100 GB of data on Amazon S3,
• Running an EC2 instance for 100 hours per month,
• Transfer 50 GB of data externally.

You can estimate the cost of such a project based on current AWS rates. Services such as AWS Pricing Calculator facilitate a detailed calculation, taking into account all aspects of billing.

Summary

AWS pricing for services is based on a model that adapts to users' needs. With principles such as pay-per-use, no minimum fees and the ability to scale costs, AWS is a great solution for startups and large corporations alike. However, to get the most out of the platform, it's worth understanding exactly how the pricing model works and monitoring your spend regularly.

If you are just getting started with AWS, take advantage of free cost analysis and budget planning tools such as AWS Pricing Calculator. This will help you optimise your spending and avoid unexpected costs in the future. And if you'd like us to help you calculate your project's AWS cloud costs, get in touch.