COST 7: How do you use pricing models to reduce cost?

Use the pricing model that is most appropriate for your resources to minimize expense.

Resources

Instance purchasing options
Accessing Reserved Instance recommendations
Save up to 90% and run production workloads on Spot

Best Practices:

• Perform pricing model analysis: Analyze each component of the workload. Determine if the component and resources will be running for extended periods (for commitment discounts), or dynamic and short running (for spot or on-demand). Perform an analysis on the workload using the Recommendations feature in AWS Cost Explorer.

• Implement regions based on cost: Resource pricing can be different in each region. Factoring in region cost ensures you pay the lowest overall price for this workload

• Select third party agreements with cost efficient terms: Cost efficient agreements and terms ensure the cost of these services scales with the benefits they provide. Select agreements and pricing that scale when they provide additional benefits to your organization.

• Implement pricing models for all components of this workload: Permanently running resources should utilize reserved capacity such as Savings Plans or reserved Instances. Short term capacity is configured to use Spot Instances, or Spot Fleet. On demand is only used for short-term workloads that cannot be interrupted and do not run long enough for reserved capacity, between 25% to 75% of the period, depending on the resource type.

• Perform pricing model analysis at the master account level: Use Cost Explorer Savings Plans and Reserved Instance recommendations to perform regular analysis at the master account level for commitment discounts.

Improvement Plan

Perform pricing model analysis

Perform a commitment discount analysis : Using Cost Explorer in your account review the Savings Plans and Reserved Instance recommendations. To ensure you implement the correct recommendations with the required discounts and risk, follow the Well-Architected labs.
Well-Architected Lab: Pricing Models

Analyze workload elasticity : Using the hourly granularity in Cost Explorer, or a custom dashboard analyze the workload elasticity. Look for regular changes in the number of instances that are running, short duration instances are candidates for spot instances or spot fleet.
Well-Architected Lab: Cost Explorer
Well-Architected Lab: Cost Visualization

Implement regions based on cost

Review region pricing : Analyze the workload costs in the current region. Starting with the highest costs by service and usage type, calculate the costs in other regions that are available. If the forecasted saving outweighs the cost of moving the component or workload, migrate to the new region.
Amazon EC2 pricing
Region Table

Select third party agreements with cost efficient terms

Analyze third party agreements and terms : Review the pricing in third party agreements. Perform modelling for different levels of your usage, and factor in new costs such as new service usage, or increases in current services due to workload growth. Decide if the additional costs provide the required benefits to your business.

Implement pricing models for all components of this workload

Implement pricing models : Using your analysis results purchase Savings Plans (SP's), Reserved Instances (RI's) or implement spot. If it is your first RI purchase then choose the top 5 or 10 recommendations in the list, then monitor and analyze the results over the next month or two. Purchase small numbers of commitment discounts regular cycles, for example every 2 weeks or monthly. Implement spot instances for workloads that can be interrupted or are stateless.
How to Purchase Reserved Instances
Spot Instances
EC2 Fleet

Workload Review Cycle : Implement a review cycle for the workload that specifically analyzes pricing model coverage. Once the workload has the required coverage, purchase additional commitment discounts every 2-4 weeks or as your organization usage changes.

Perform pricing model analysis at the master account level

Perform a commitment discount analysis : Using Cost Explorer in your account review the Savings Plans and Reserved Instance recommendations. To ensure you implement the correct recommendations with the required discounts and risk, follow the Well-Architected labs.
Well-Architected Lab: Pricing Models