This document discusses various ways to optimize costs when using AWS services including using elastic capacity to only pay for resources when they are turned on, choosing the appropriate EC2 instance types, leveraging reserved instances for consistent usage, taking advantage of lower priced spot instances, and using complementary services like SQS that have very low per usage costs. The strategies provided give examples of how to save 25-75% on costs through these optimization techniques.

1. COST OPTIMIZATION
Ianni Vamvadelis
Solutions Architect

2. Multiple dimensions of optimization
Cost
Performance
Response time
Time to market
High-availability
Scalability
Security
Manageability
…….

3. Elastic Capacity

4. When you turn off your cloud resources,
you actually stop paying for them

5. 6 am

6. 10 am

7. Web Servers
25% Savings
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Hour
during a day

8. www.MyWebSite.com
(dynamic data)
Amazon Route 53 media.MyWebSite.com
(DNS) (static content,
Elastic Load
streaming media)
Balancer
Amazon
CloudFront
Auto Scaling group : Web Tier
Amazon EC2
Auto Scaling group : App Tier
Amazon RDS Amazon Amazon S3
RDS

9. Auto scaling options
• Scaling base on Policy
– Scale up and down base on metrics
 Scaling Up policy - Double the group size if avg cpu > 80%
 Scaling Down policy - Decrement by 10% if avg cpu < 30%
• Scaling by Schedule
 Scheduled Actions to meet known demand
 Scheduled up to 31 days into the future
 Recurring scheduled scaling activities.

10. Web Servers 75% Savings
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
Days of the Month
during a month

11. Instance Types

13. On Demand

14. Choosing an Instance Type
• Start with the EC2 instance type that best matches
– memory requirements
 virtual cores
• Tune your instance type to optimise for cost
– No need to get it right first time
• Run across AZs
 Smaller sizes => more granularity => deploy across AZs

15. Knowing your usage
Free Memory
Free CPU PUT 2 weeks
Free HDD
At 1-min intervals Alarm
Amazon
Instance CloudWatch
Custom Metrics

16. Billing alerts
Dev 1 Dev 1 reached $100
Dev 2 Dev 2 reached $250
Test Master Account Test reached $1,000
Production Prod reached $1,200
Internal
Systems Int. reached $400

17. Programmatic access Cost accounting in
favorite package
Billing Alerts
Dev 1 Bill reached $x
Dev 2
Test Master Account
Production Data labeled by
Internal source in S3
Systems Consolidated Billing

18. Basic Offering
24x7x365 ✓
Developer Forum Access ✓
Documentation ✓
Business Access to support Phone, Chat,
Email
Enterprise Named Contacts 5
Fastest Response Time 1 Hour
Architecture Support Use Case
Guidance
Best Practice ✓
Diagnostics Tools ✓
Direct Routing ✓
3rd Party Software ✓
Trusted Advisor ✓

19. Basic Offering
24x7x365 ✓
Developer Forum Access ✓
Documentation ✓
Business Access to support Phone, Chat,
Email
Enterprise Named Contacts 5
Fastest Response Time 1 Hour
Architecture Support Use Case
Guidance
Best Practice ✓
Diagnostics Tools ✓
Direct Routing ✓
3rd Party Software ✓
Trusted Advisor ✓

22. Horizontal Scaling
and
Vertical Scaling

23. Reserved Instances

24. Optimize by using Reserved Instances
On-demand Reserved Spot
Instances Instances Instances
• Pay as you go • One time low • Requested Bid
upfront fee + lower Price and Pay as
hourly cost you go
• Starts from • $23 for 1 year term • $0.005/Hour as of
$0.02/Hour and $0.012/Hour today at 9 AM
1-year and 3-
year terms
Heavy Medium Light
Utilization RI Utilization RI Utilization RI

25. Light Utilization RI
• 15-40% utilization
• Lower costs up to 34%
• Use Cases: Disaster Recovery, Weekly /
Monthly reporting, Elastic Map Reduce

26. Medium Utilization RI
• 41-79% utilization
• Lower costs up to 49%
• Use Cases: Web applications, many heavy
processing tasks, running much of the time

27. Heavy Utilization RI
• > 80% utilization
• Lower costs up to 58%
• Use Cases: Databases, Large Scale HPC, Always-
on infrastructure, Baseline

28. Best RI for Utilisation
$18,000
$16,000
$14,000
$12,000
$10,000 Heavy
$8,000 Medium
Light
$6,000
O-Demand
$4,000
$2,000
$-

29. Optimizing Cost with RIs
14
12
10
On Demand
Light Utilization RI
8
Medium Utilization RI
6
Heavy utilization RI
4
2
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

30. http://aws.amazon.com/whitepapers

31. Spot Instances
Bid on unused Amazon EC2 capacity.

32. Optimize by using Spot Instances
On-demand Reserved Spot
Instances Instances Instances
• Pay as you go • One time low • Requested Bid
upfront fee + Pay as Price and Pay as
you go you go
• Starts from • $23 for 1 year term • $0.005/Hour as of
$0.025/Hour and $0.015/Hour today at 9 AM

33. What are Spot Instances?
Sold at Sold at
50%
Unused Unused
54%
Discount! Discount!
Sold at Sold at
Unused
56% 59%
Unused
Discount! Discount!
Sold at Sold at
Unused
66% 63%
Unused
Discount! Discount!
Availability Zone Availability Zone
Region

34. What is the tradeoff?
Unused Unused
Unused
Reclaimed Unused
Unused
Reclaimed Unused
Availability Zone Availability Zone
Region

37. Architecting for Spot Instances
Decouple Components
 Separate interactive and backend processing
Design for interruption
 Use SQS, SWF
 data in a durable store
 save progress regularly

38. Use Cases for Spot
Financial Modelling Testing Scientific Computing
Analytics
and Analysis
Geospatial Analysis Media Encoding Web Crawling Big Data

39. EMR with Spot Instances
Scenario #1 Scenario #2 #1: Cost without Spot
Job Flow 4 instances *14 hrs * $0.50 = $28
Job Flow
#2: Cost with Spot
4 instances *7 hrs * $0.50 = $14 +
5 instances * 7 hrs * $0.25 = $8.75
Total = $22.75
Duration: Duration:
14 Hours Time Savings: 50%
7 Hours Cost Savings: ~22%

40. Bidding Strategies

41. Strategy: Optimize for Cost
• Engineered application towards a cost
• Set low maximum bid price to minimize costs
• Comfortable if process takes longer or jobs were re-run
• When interrupted, no charge for that hour.

42. $$$$$$$$$$$$$$$$$$ $$$ $ $ $ $

43. Strategy: Price History Momentum
• Monitor spot market price
• Bid 10% above Average Spot Price of the Last Hour
• Maximum bid of 80% of On-Demand Price
• Expect fewer interruptions than Optimize for Cost

44. Strategy: Price History Momentum

45. Strategy: Discount over On-Demand
• Bid around the On-Demand price
• Use On-Demand instance when Spot Price exceeds On-Demand price
(or slightly higher)
• May pay more some hours, but on average they pay significantly less
• This bidding strategy ensures a discount over On-Demand

46. Strategy: Discount over On-Demand
Switch to Substantial
Switch Back Savings
On-Demand
to Spot
Much lower
costs than
On-Demand

47. Strategy: Minimize Interruption
~57%
Savings
On Average
Substantial
Savings

49. Complementary services

50. $0.028
per hour DNS Elastic Load Web Servers
Balancer
Availability Zone
$0.085
per hour EC2 instance
(small instance) DNS Web Servers
+ software LB
Availability Zone

51. Consumers
Producer SQS queue
$0.01 per
10,000 Requests
($0.000001 per Request)
$0.085
per hour Producer
(small instance) EC2 instance Consumers
+ software queue

52. Software v/s Services
Software on EC2 SNS, SQS, SES, SWF
Pros Pros
• Custom features • Pay as you go
• Scalability
Cons • Availability
• Requires an instance • High performance
• SPOF
• Limited to one AZ
• DIY administration

53. 1. Elastic Capacity
2. Instance Types
3. Reserved Instances
4. Spot Instances
5. Complementary services

54. Next Steps:
aws.amazon.com/economics
aws.amazon.com/calculator