How to Reduce AWS Costs

How to Reduce AWS Costs

At Back4App, we use the Amazon Web Services extensively because this cloud provider hosts the vast majority of our infrastructure. We will show you the strategies we applied for saving up to $500,000 in Amazon Web Services every year in our AWS bill.  These strategies will be useful to startups, software companies, and other enterprises that use AWS cloud services.

  • This article outlines methods that we have applied to reduce our expenditure on AWS.
  • How you can access short-term benefits from AWS services with relative ease.
  • The procedures are not complicated. But you need to plan and put in some effort.

The previous experiences derived from using AWS to manage our cloud infrastructure forms the basis of the strategies outlined in this article. They are the methods we have used to reduce our expenditure on AWS. So, you to can apply them to make substantial savings on AWS. We kept monitoring the progress of these strategies for reducing costs through a simple spreadsheet. You can also download the spreadsheet and use it free of charge.

EC2 – Elastic Compute Cloud

We were able to make direct savings by optimizing the EC2 -Elastic Cloud Instances. The procedure is straightforward; all that is required is to evaluate the sizes of instances and shut down the redundant ones. Always make sure you use the last generation instance types. They are more cost-efficient and delivers more processing power.

The spreadsheet below will help you through the process. Download it.

Download your EC2 Cost Reduction Template Here

The second step to save substantial cost is to use a long-term reservation for the services you use around the clock. You can reserve 12-36 months instances directly from AWS or use the AWS marketplace. Those who are using Elastic Cache (Redis) should reserve nodes as well.

Another approach, which is a bit complicated, is to employ autoscaling measures to optimize the use of idle resources. With this setting, you will only have to pay for the instances you actually use. You can still reduce the cost further by using Spot Instances to scale-up your resource usage.

Below, the EC cost reduction steps.

  • Decrease the instance sizes.
  • Use no auto-scaling to minimize idle resources.
  • Keep a Reserve of instances on the Marketplace.
  • Save cost by using Standard instances instead of Convertible instances
  • Try Spot Instances
  • Upgrade to new generation instances.
  • Attain maximum performance by enabling enhanced network.
  • Prices differ with regions. Choose North Virginia for the cheapest option.

EBS – Elastic Block Store

The rule of thumb is to ensure you do not back up your data here. Rather use S3 for your backup. Be mindful of the fact that when the right EBS volume is attached to each instance, each volume must be the correct type and the right size. Remember that SSD volumes cost about two times the price of Magnetic volumes.

Below, the EBS cost reduction steps:

  • Always terminate instances instead of stopping them
  • Prefer Magnetic storage over SSD

S3 – Simple Storage Service

You must select the appropriate storage class for each data type. For instance, you should use the cheaper S3 Glacier instead of the S3 Standard for data achieving. This approach alone can save you up to 400% on storage used for archiving.

You should also try to understand your S3 requests and monitor them.  Bear in mind that each time you move data from one storage class to another, you are using API requests, and you will be charged for it.

High volume accounts can use this small tweak to save costs. Install an S3 endpoint in your VPC to provide an internal route for S3. The charges incurred will be considerably cheaper than a public transfer.

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Below, the S3 cost reduction actions:

  • Choose a class for your S3 storage.
  • Place an endpoint in your VPC
  • Always monitor your S3 requests
  • Avoid using EBS for Rather, back up your data here.

Data Transfer (ELB & S3)

When you use a cache for your service, you will be making extensive savings on the cost of data transfer. That is why you should make sure that your endpoints are connected to a CDN service.

There are three major ways of incurring data transfer costs on AWS, These are Transfer Out, Inter-Regions, and Inter AZ. Some of the tweaks below will help you make savings on data transfer.

  • Move Transfer Out to CloudFront
  • Combine all non-critical applications under single AZ
  • Combine all applications which are non-critical under a single Region.

You will save costs by replacing your REST APIs with GraphQL APIs because the number of requests per data transfer-out is reduced significantly. Read the checklist in the link below for more information about GraphQL Getting Started with GraphQL.

Below the data transfer cost reduction steps:

  • Replace REST with GraphQL APIs.
  • Make sure you are connected to a CDN service
  • Moving to CloudFront can potentially save you a lot of money
  • Using a single availability zone will reduce inter-AZ costs


Given the same level of data usage, CloudFront is cheaper than ELB. With AWS, you can enjoy concessions such as a discount on volume and long-term contracts. The cost of your CloudFront transfer can be as low as $0.02/GB, depending on your negotiating power and the usage volume.

Ask for Credits

The vast majority of the saving is in Startup credits. You can take advantage of the many startup perks that AWS has to offer, which can be up to $100,000 in credits.  Besides startups, software development companies and other businesses can also ask for credits for testing AWS services.  Most likely, AWS will oblige, but the amount will be substantially lower than what they offer startups.

Monitoring & Reporting

There are internal tools such as Watch Explorer and Cloud Watch that can be used to monitor expenditure on AWS. However, you can integrate third-party services such as Dynatrace and Sumo Logic for monitoring your AWS performance. We believe these tips would help you make substantial savings on AWS. Click here to learn more about how to cut down on your AWS expenditure.

Below how monitoring can reduce your AWS bill.

  • Create precise cost reduction goals
  • Establish a routine for saving costs consistently.
  • Tag everything

Want to know about reducing AWS Costs? Please read the complete article at How to Reduce AWS Costs.



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