Cost Optimization Strategies for AWS Cloud Migration

More and more companies are migrating to AWS cloud these days. Besides cutting operational expenses, AWS cloud migration helps organizations move faster, convert customer experiences, deliver on business modernization or digital transformation, and drive new business models and innovations. 

A study by The Hackett Group reveals that businesses that move to AWS cloud achieve several benefits, like:

  • 43% lower time to promote new features
  • 69% decrease in downtime
  • 20% cost savings on technology infrastructure
  • 29% increase in innovation

Besides these benefits, AWS cloud migrations also involve a lot of wasteful spending, as Flexera, the IT analytics company reported in its State of the Cloud Report. Self-estimates by different companies reveal wasteful spending in AWS cloud computing to be approximately 35%. Though decreasing wasteful spending to 0% is impossible, even a small decrease can be useful. 

Some of the most effective strategies that can help you manage and optimize AWS cloud migration costs along with usage data are as follows:

  1. Start with AWS Cloud Migration Cost Optimization ASAP

New businesses have more focus on growing their MRR or monthly recurring revenue instead of increasing their gross margin. An increase of even 1% in the gross margin can significantly boost a business’s valuation, thus increasing its potential to raise adequate capital.

The common conception is that gross margin increases as a business scales. But that is not always the case because controlling costs as a business scaling up may be quite challenging. Therefore, it will work for organizations to keep track of their AWS usage expenses as soon as possible. This will help you understand where your cloud budget is going, and you may instantly optimize to reduce expenses.

Use native AWS cloud financial management tools to start with cost optimization immediately. And as your organization evolves and needs more advanced ways of AWS cloud cost optimization, you can save a lot of money. 

  1. Use Tags in the AWS Cloud Environment

Using tags in your AWS cloud environment can help you organize all resources and track your cloud migration expenditures at a detailed level. Categorize the resources by purpose, environment, or owner to organize them perfectly and assign proper cost accountability. But make sure to use quality tagging like user-defined cost allocation and AWS-generated tags.

  1. Use Unit Cost Analysis to Limit Your Spending Without Limiting Growth

Conventional AWS cost optimization tools are inaccurate and clunky. They do not allow the users to get the details of their AWS expenses to determine how much is going into support activities, engineering teams, and product features. This kind of compromised cost visibility makes it challenging to manage costs while offering a smooth customer experience and experiencing innovation and growth.

Unit cost analysis helps to correlate AWS resource usage and costs to procedures, products, and individuals. For example, you can examine your AWS expenses to understand tenant or customer costs and the costs of engineering projects and features. Uni cost analysis can help you determine different scopes of cutting costs without sacrificing:

  • New feature releases and constant security patches as part of cyber security and engineering innovation initiatives.
  • AWS service performance 
  • Performance of product features

You can easily do this by comparing your returns on investment from the cost centers or by deciding on the tradeoffs you must make to avoid poor business results. But make sure to group and measure all costs by whatever metrics work positively for your business context.

  1. Go for the Right Price Structure

With AWS cloud migration, you get a plethora of price structures for storage, computing, and various other solutions. So, make sure to opt for a suitable price model to manage costs based on the nature of your workload.

  • The On-Demand Pricing Model: This price structure features an hourly rate or can even be billed in one-second increments. The on-demand price structure is perfect for unpredictable applications with periodic spikes or short-term workloads.
  • Amazon EC2 Spot Instances: This AWS pricing model allows you to reap the benefits of unused EC2 potential at discounts of approximately 90% off the on-demand rate. Spot Instances are best for flexible, tolerant applications and test and development workloads. EC2 Spot Instances can easily be interrupted with 2-minute warnings if AWS requires capacity back.
  • Commitment Discounts: Perfect for long-term assignments and workloads with predictable and stable behavior, commitment discounts come in different forms for users to choose from as per their business requirements. There are savings plans for users to make hourly commitments, reserved instances with 1 to 3 years of capacity reservations, and usage discounts for minimum usage commitments.
  1. Avoid Paying for Low-Utilized or Idle Amazon RDS or ECD2 Instances

You must check and identify RDS instances that have not had a connection in the last seven years and stop them immediately to reduce costs. In the same way, you can use different tools to get reports of low utilization or idle EC2 instances and downsize or stop them immediately for cost optimization. You must also get the required data on using EC2 instances and choose the ones that best suit your migration requirements.

  1. Reduce the Cost of Data Transfer

Transferring data from AWS resources like S3 and EC2 to the public internet or users may cost exorbitantly. To reduce such costs, you can use Amazon CloudFront CDN, which has several edge locations that cache static and dynamic web content. At the same time, you must also aim to avoid using public IP addresses for internal communication within a similar Availability Zone. Data transfers between resources with the use of private IP addresses are free.


AWS cloud migration cost optimization can help you improve control through access permission and consolidated billing, and it also enables better planning through forecasts and budgeting. The strategies above can help with AWS cloud cost optimization, but which will specifically work for your business will ultimately depend on your organization’s architecture.

Related Articles

Check Also
Back to top button