AWS Pricing Models

1. AWS Pricing Models

Great job making it to the final chapter. Let's dive into AWS pricing and cost management concepts. We'll cover pricing model, budgets, cost allocation and optimization.

2. Pricing models

AWS pricing is similar to phone plans. The first option is pay-as-you-go where there are no commitments. However, there are no upfront savings. Discounts apply if a customer commits to spend for a longer duration or buys more credits. This is similar to buying long-duration or unlimited phone plans.

3. Pay-as-you-go

Pay-as-you-go or on-demand pricing is similar to how you pay for utilities like water and electricity. You only pay for the services you consume, and once you stop using them, there are no additional costs or termination fees. In this example, the customer is charged only for the duration when the EC2 instance is running. This is similar to how you are charged water usage fees if the water faucet is running.

4. Save when you commit

Reserved instances offer savings over On-Demand pricing in exchange for a commitment of one- or three-year period. In this table, pricing for an R7 extra large EC2 server is displayed. Using on-demand pricing, the server costs $1 per hour or $734.67/month. For a 1-year commitment, you get a 33% discount on the monthly cost and for a 3-year commitment, you get a 54.78%. The maximum discount with commitment is 72% but it requires complete upfront payment.

5. Pay less by using more

You can get volume-based discounts as your usage increases. For example, AWS S3 charges $0.023/GB for storage up to 50TB. The cost decreases to $0.021/GB for storage above 500TB. This reduction in pricing is because of the economies of scale similar to how wholesale offers discounts over the retail price of goods.

6. Bandwidth costs

Transferring data across different AWS regions costs money and it can be a significant amount! Let's understand these costs. A cluster of data center buildings is called availability zone and multiple zones over a metropolitan area is called a region. All inbound traffic from Internet or another region is free. But internet outbound has the highest data costs identified in red arrows in the diagram. Transfer between availability zones within the same region, highlighted in yellow, costs money in both direction and has the lowest price tier. Egress from one region to another, identified in orange, costs more than intra-availability charges but less than egress to Internet. Let us now review how to estimate AWS costs using pricing calculator.

7. Pricing calculator

The AWS Pricing Calculator is a free web-based planning tool that you can use to create cost estimates for using AWS services. Using the calculator, you can model your solutions, explore price points, plan your spending, and find savings opportunities.

8. Let's practice!

Let's work on a few exercises!

Create Your Free Account

By continuing, you accept our Terms of Use, our Privacy Policy and that your data is stored in the USA.