An Alternative View On How To Use Cloud Pricing To Maximize Savings
One of the greatest advantages that cloud vendors have is the ability to provide an amazing array of resources to clients in a “Pay-as-you-go” model. Amazon Web Services for example provides the capability to almost instantaneously activate over 150+ different applications on a global infrastructure of data centers. In addition to AWS native products there is an entire marketplace of products from third-party vendors such as Microsoft or Splunk.
The best method to maximizing cost savings using the cloud is to actually NOT use it in a pay-as-you-go manner….for the majority of your requirements.
This may seem counter-intuitive but let me explain. The best way to maximize cost savings using the cloud is to identify those services you absolutely know you are going to use, such as storage or computing, and then purchasing them for a set period of time with money up front. This will enable you to see massive discounts ranging from 40–80% and is a proven method to maximize cost savings using the cloud. For those services you are not sure you are going to need, such as unique applications like Machine Learning or some unique software like AWS Device Farm you use “Pay-as-you-go.”
Here is an example I built using the Simple Monthly Calculator for AWS services using a (3) year window as my experimentation baseline and selecting US East Coat region for all calculations.
“Pay-as-you-go” pricing for (50) EC2 instances came to a price point of $12,180.25/Month over a 3-year period. This totaled: $438,480 over 3-years. Purchasing a reserved instance of (50) EC2 Instances for 3-years with all money up front equated to $196,950.
By identifying what services I knew my company was going to need over the next three years and paying for the services up front, I was able to produce a nearly 45% discount on cloud-services. Even if my calculated needs were far too low over the next three years of what I would need, I can always use the “Pay-as-you-go” model to immediately increase resources where needed.
Cloud users should break down their needs into buckets of “Will need” vs. “May need” in the future. These buckets can be further broken down into verticals such as “Compute, Storage, Networking” or even further into “Database, Migration, Developer Tools, and Analytics.” By identifying what you know you will need over the next three-five years, regardless of specific project, you can increase savings almost 50% over “Pay-as-you-go.”
There are several other ways to save using AWS depending on your needs. AWS Reserved Instances can achieve savings of over 75% if used correctly. Enterprise clients can request and “Enterprise Level Discount” and there are other discounts specific to services or application such as VMware on AWS.
You can reach me at mpben@amazon.com if you have any questions or would like to discuss any of these topics further. Connect with me here on LinkedIn. Thank you.
