1. San Diego AWS User Group
AWS Economics: Learn how to efficiently optimize your resource utilization and control your costs
San Diego AWS User Group
Aaron C. Newman
Founder, CloudCheckr

2. Agenda: Overview of Costs in AWS Going “Reserved” Going “Spot”
Optimizing Resources
CloudCheckr Demo
Conclusion, Resource, and Questions

3. Overview of AWS Costs

4. State of Cloud Computing Cost
10 years ago
The datacenter was a (mostly) fixed cost
High cost for even the most basic data center
You paid for your peak capacity
Co-location/ISPs as an alternative
Still buying your own equipment/building for peak capacity
High margins were the norm
About 2010 Public Cloud Turns the Corner
Technology matures
Becomes the de facto for getting a startup off the ground
Amazon starts compressing the high margin IT business
Over 20 price reductions in Amazon AWS by 2013
Prices continue to drop. But what is the reality of those 20 price reductions?
EC2 Linux Small Instance (On-Demand Per Hour):
Aug 2006 = $0.10, Nov 2009 = $0.085, May 2013 = $0.06
Extrapolate that to 2015 = somewhere between $0.035 and $0.05

5. Cost is a product of usage
In old data center, cost was fixed
Once you bought the equipment, little could be done to reduce your cost. No advantage to ever scale down.
The public cloud is heavily weighted to variable costs
If you can use less, you spend less
Optimizing Resource Utilization in the Cloud matter
Computational engines – run as close to 100% as possible
Interactive components – need a cushion for peak usage
Auto scaling - important tool for optimizing cloud usage
Scale down as much as scaling up

6. AWS Costs
(Bytes of Data Transferred) * Price + (Size of Compute Resource) * (Price of Compute Resource) * (Number of Hours) (Storage Used) * Price * (Time Stored) (Transactions Processed) * Price

7. Architecting Applications
In the past, architecture was typically a large, multi-threaded executable talking to a single database running on the biggest boxes you could afford. Sat idle a lot.
Moving old apps into the cloud
Can you resize your resources different times of the day?
Use load balancers or Multi AZ capabilities to resize
Important to design your apps to scale horizontally
Design you application into components
That can be added or removed dynamically

8. Going “Reserved”

9. What is Reserved? Pay up front, get a lower variable cost
ROI – as high as 500% over 3 years, 60% savings in cost
Types of Reserved Resources Available
EC2 Instance
RDS DB Instance
Elasticache Node
Types
Utilization – light, medium, heavy
Utilization <> Resource Utilization
Commitments – 1 or 3 year

10. Calculating ROI on Reserved Instances

11. Warnings using Reserved Instances
Need to be able to predict what you’ll use
If you design application to scale horizontally this becomes easier
Heavy Reserved Instances – even if you don’t use it you’re charge
Match reserved instances carefully!
OS Type, Availability Zone, Size (VPC vs. Classic, Tenancy only matter for guaranteed availability)
AWS tools do not show you if an instance is properly mapped
Determine your highest ROI – Instances, Database, Nodes?
Consolidated Billing
Reserved Pricing is applied across AWS accounts
AWS Tools do not show you how your reserved instances are applied

12. Going “Spot”

13. What is Spot Pricing Bidding for unused instances
Supply and demand dictates current price
Place your max bid, your instance shuts down if max bid exceeded by others
Spot is almost always cheaper
But you need to consider < 99% availability
Spot prices spike frequently
Slightly slower to spin up
Wait for spot request to be fulfilled before instance can start
More complex to manage
Using EBS/Instance store

14. What Does Spot Pricing Look Like
Example spot pricing:
US East, Linux, M1 Small (1 ECU):
SA, Linux, M1 Small (1 ECU): 0.011
On demand: US East = 0.06, SA = 0.08
US East, Linux, M1 Extra Large (8 ECU):
SA, Linux, M1 Extra Large (8 ECU): 0.084
On-demand: US East = 0.48, SA = 0.64
US East, Linux, M3 Double Extra Large (26 ECU) 0.115
SA, Linux, M3 Double Extra Large (26 ECU) 0.185
On-demand: US East = 1.00, SA = 1.36
Spot Pricing is typically 10-20% of On-Demand
But can easily spike HIGHER than On-Demand

15. Spot Strategies
Most people don’t understand spot pricing, afraid to use it
As more people understand and use it, pricing will be driven up
Very tempting but dangerous to run exclusively on Spot
From GigaOm: “A sudden spike in the price of “m2.2xlarge” servers (normally $.44/hour) drove the price briefly up to $999/hour, causing a site-wise outage.”
If you follow this strategy, use a variety of instance sizes, Availability Zones, and even regions to minimize the risk
Hybrid Reserved/Spot strategies
Run as many spot instances as possible
But maintain a base level of Reserved Instances
Switch to On-Demand if Bid Price Exceeds On-Demand Price
This is a manually intensive strategy

16. Optimizing Resources

17. Overview Keep track of what you are using Horizontally scale
Find and eliminate idle instances
Find and reduce under-utilized resources
Unused EBS drives, ELB, multiple snapshots of same EBS drive
Horizontally scale
Find smallest instance type that can handle your transactions
Find your bottle necks (network, disk I/O, CPU util, memory util)
Turning off resources when they aren’t used
Turn off over the weekend, overnight
Use only what you need
E.g. don’t check multiple copies of buckets in S3

18. Optimizing Instance Types
Picking the optimal Instance Type:
Comparing ECU (EC2 Compute Units)
M1 Small (1 ECU) On-Demand in US East = $0.06 ($0.06 per ECU)
M3 Double Extra Large (26 ECU) On-Demand in US East = $1.00 ($ per ECU)
Comparing the cost of Memory
M1 Small (1.7 GiB memory) On-Demand in US East = $0.06 ($0.035 per GiB)
M3 Double Extra Large (30 GiB memory) On-Demand in US East = $1.00 ($0.033 per GiB)
But you need to compare Resource Type, Pricing Type (on-demand/spot/reserved), Region, AZ, etc… for your circumstance

19. S3, Glacier, and RRS
S3 Pricing: > $0.10 cents per gigabyte (starts at 9.5c in US East)
Reduced Redundancy Storage
AWS doesn’t store as many copies of your S3 objects
Typically about 20% cheaper (US East $0.095 reduced to $0.076)
Ideal if you are storing terabytes or petabytes of songs, movies, documents that can be recovered
How much of your S3 storage can you convert to RRS?
Glacier Pricing – about 1 cent per gigabyte
Pricing difference from S3 decreases as the price goes up
Takes 3-5 hours to retrieve files, and cost to retrieve

20. 5 Strategies To Optimize
Keep a close handle on what you are running in the cloud
Measure what you are spending
Calculate Return On Investment
Minimize what you don’t need

21. CloudCheckr Demo

22. It’s Not About the Price
Cloud Computing is not about the cost
It’s about accelerating business, moving faster
IaaS is following in SaaS footstep
SalesForce.com pioneered the movement
Hard to imagined a third-party controlling your entire customer list (one of your most valuable assets)
They proved it was secure, prudent, and effective
Still see some of the slower moving Corporate types claiming “production work loads can’t be run on the cloud”
While their competitors leveraging the cloud eat their lunch

23. Resources Further reading: “How AWS Pricing Works”
AWS Service Pricing Overview
CloudCheckr Whitepaper Cost Series
AWS Simple Monthly Calculator

24. Questions? Questions on: Cloud Computing Resource Utilization
Optimizing Your Costs
CloudCheckr

25. Thank You for Attending
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check your public cloud at
Aaron Newman is the Founder
of CloudCheckr (
Please contact me with additional questions at: