AWS pricing fundamentals

When using Amazon Web Services (AWS), there are three primary factors that determine your costs:

  1. Compute: This includes the amount of resources such as CPU and RAM you use, as well as the duration for which you use them.
  2. Data Storage: The quantity of data stored or allocated.
  3. Outbound Data Transfer: The amount of data transferred out from all services.

It's important to be cautious and monitor your usage to avoid unexpected costs.

AWS Pricing Models

On Demand (Pay as you Go)

The On Demand model allows you to:

  • Easily adapt to changing business needs.
  • Adjust based on your requirements.
  • Reduce the risk of paying for unused capacity.

Reserved Instance (Save When You Reserve)

By investing in reserved capacity, such as with EC2 or RDS, you can:

  • Ensure you have resources available for unexpected scenarios like web traffic spikes.
  • Reserve resources for 1-3 years, which can lead to significant discounts.
  • Save up to 75% compared to the Pay-as-you-Go model.
  • The more you pay upfront, the greater the discount.

Spot Instances (Grab spot when available)

By this model AWS allows you to allocate resources when there is available spot bu bidding. 
  • Resources with this model is a lot cheaper up to 90%
  • But AWS might reclaim resources with little notice (2 min. upfront) on demand.
  • Great for ML and HPC applications, testing and prototyping.
  • AWS might reclaim resources when spot price exceeds bid price.

Saving Plan (Pay Less When You Use More)

This model offers discounts when your usage exceeds certain thresholds, rewarding you for using more resources.

Factors Affecting AWS Pricing

Several factors influence AWS pricing, including:

  • Region Used: Different regions have different pricing.
  • Taxes: Applicable taxes can affect the total cost.
  • Changes in Pricing: AWS may update its pricing, so staying informed is crucial.
  • Usage Models: Your costs can vary based on the "Pay less when you use more" model.

By understanding these fundamentals and pricing models, you can better manage your AWS costs and optimize your usage.





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