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What's the Cost of the Cloud? Everything You Need to Know about AWS Pricing

cost of cloud 

AWS has been dominating the cloud space for quite some time and there's no denying that Amazon is still the market leader. They've survived the competition and stayed on top for a decade. But have you ever wondered why a particular service is more successful than the others? In Amazon's case, the two prominent factors are the quality and quantity of service offered and a pricing model that is easy on the pocket.

At a time when enterprises were building dedicated data centers, Amazon came up with the idea of building public cloud spaces, and also offered attractive pricing schemes and freebies for new users. It's very evident that their pricing scheme has a lot to do with their success. In this article, we'll be focusing on Amazon's pricing model and the cost of setting up a cloud space.

The AWS Pricing Model and How it Works

AWS follows a pricing model where you pay for the amount of resource that you use. The features of the pricing model is explained below:

Free Tier

The free tier option lets you try most of the cloud features for free for a year. Amazon customers can avail the offer for EC2, RDS, S3, Elastic Block Store, Elastic Load Balancing and other AWS services. For instance, you can run EC2 and EBS on free tier to host a website for 1 year. EBS pricing will be null as long your usage doesn't exceed the 30GB of Storage. The free tier for the EC2 includes 730 hours of t2.micro instance (see this resource by N2WS for more details on EBS pricing).

Pay for what you use

You can pay as you go and settle your bills at the end of month without any upfront capital investment. If you're not keen on signing a long term contract, this will work best for you. Most of the resources are available on demand, and charged on an hourly basis. The costs are calculated based on the number of hours the resource was active. For data storage and data transfer, the rates are calculated per Gigabyte.

Reserve and pay less

Apart from the on-demand pricing scheme, Amazon has an alternate scheme called Reserved Instance (RI) that lets you reserve capacity for certain products. RI offers discounted hourly rate and capacity reservation for EC2 and RDS. Reserving a resource can save you up to 75% in the long run and the discounted rates are applied in your AWS bills. You can reserve instances either for a 1-year or a 3-year term.

Use more and pay even less

For data storage and data transfer services, Amazon offers discounts based on your usage. For EC2, you can get discount of up to 10% if you reserve more. The image below demonstrates the pricing of the AWS S3 bucket based on usage.

AWS-Pricing

Fundamental Pricing Characteristics

AWS considers three fundamental characteristics that determines the pricing. They are compute, storage and outbound data transfer. The products that are related to these have the highest cost compared to other services offered by Amazon. Inbound data transfers across AWS and data transfer within the same region are not charged.

The outbound data transfer across different products is consolidated and billed to you on a Monthly basis. The other two pricing characteristics - compute and storage - depends on some of the popular services on AWS such as Amazon Elastic Compute Cloud (Amazon EC2), Amazon Simple Storage Service (Amazon S3) and Amazon Elastic Block Storage (Amazon EBS). The rest of the post describes each scenario in action.

Amazon Elastic Compute Cloud

Amazon EC2 offers resizable compute services in the cloud. They are resizable because you can scale them up or down based on your requirement and on demand. However, you will only be charged for the capacity that you actually use. They are classified into 5 types and I've listed them below.

  1. General instances: For general purpose application that need a balance between cost and price.
    • Low: $0.0116 per Hour
    • High: $4.608 per Hour
  2. Compute Instances: For compute intensive tasks like data processing and crunching.
    • Low: $0.085 per Hour
    • High: $3.06 per Hour
  3. Memory Instances: For multitasking systems that require large amount of memory.
    • Low: $0.133 per Hour
    • High: $13.338 per Hour
  4. Storage Instances: For storing huge data set or that require large storage space.
    • Low: $0.156 per Hour
    • High: $5.52 per Hour
  5. GPU Instances: For running graphic rendering tasks like CGI:
    • Low: $0.9 per Hour
    • High: $24.48 per Hour

You can read about the exact pricing scheme at Amazon's EC2 pricing page.

Amazon Elastic Block Storage

Elastic block storage offers persistent block level storage volumes that you can use with your EC2 instance. However, they are independent from the EC2 instance and they will persist even if the EC2 instance is terminated. AWS provides three EBS volumes - General Purpose (SSD), Provisioned IOPS (SSD), and Magnetic. Based on performance characteristics and location, Amazon EBS pricing might vary. But here are the prices at US East region.

  1. Amazon EBS General Purpose SSD (gp2) volumes
    • $0.10 per GB-month of provisioned storage
  2. Amazon EBS Provisioned IOPS SSD (io1) volumes
    • $0.125 per GB-month of provisioned storage
    • $0.065 per provisioned IOPS-month
  3. Amazon EBS Magnetic volumes
    • $0.05 per GB-month of provisioned storage
    • $0.05 per 1 million I/O requests

Amazon Simple Storage Service

Amazon S3 is an object storage service that lets you store and retrieve any amount of data. Websites, mobile apps, corporate websites and apps etc. can make use of this feature to upload files securely files and assets securely and then retrieve whenever necessary. The service can be used for backup and recovery, data archiving, big data analytics, hybrid cloud storage etc. Amazon S3 pricing varies based on location. Here is the standard price at US East region.

  1. Standard Storage
    • First 50 TB / Month  $0.023 per GB
    • Next 450 TB / Month  $0.022 per GB
    • Over 500 TB / Month  $0.021 per GB
  2. Standard - Infrequent Access Storage
    • All storage  $0.0125 per GB
  3. Glacier Storage
    • All storage  $0.004 per GB

You can read more about S3 on Amazon.

How to further reduce AWS pricing?

You can further reduce pricing by going for reserved instances or spot instances for your EC2 and RDS instances. On-demand instances are particularly useful if you going to use it for a fixed amount of hours a day. However, if you are going to use it on a continuous basis, you should shift to reserved instances to cut costs. Reserved instances offer upfront, partial upfront and no upfront payment options too.

You should also check out the monthly calculator to estimate costs beforehand and run through possible combinations to see what's cheaper. I hope that you've found this post useful. Share your thoughts about AWS pricing through the comments.

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About the Author

Limor Wainstein 

Limor is a technical writer and editor at Agile SEO, a boutique digital marketing agency focused on technology and SaaS markets. She has over 10 years' experience writing technical articles and documentation for various audiences, including technical on-site content, software documentation, and dev guides. She specializes in big data analytics, computer/network security, middleware, software development and APIs.

Published Thursday, March 29, 2018 7:36 AM by David Marshall
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