One of the biggest advantages of AWS is its flexible pricing model. But without understanding how charges are calculated, it's easy to get unexpected bills. This lesson covers the core pricing concepts and the tools available to control costs.
AWS Pricing Fundamentals
AWS pricing is based on three main factors:
- Compute: Charged per hour or per second (EC2, Lambda, Fargate). Depends on instance type, region, and pricing model.
- Storage: Charged per GB per month (S3, EBS, EFS). Different storage classes have different rates.
- Data Transfer: Data transferred into AWS is usually free. Data transferred out to the internet is charged per GB. Transfer between services in the same region is often free or very low cost.
AWS Free Tier
New AWS accounts get 12 months of free tier access. Key inclusions:
- 750 hours/month of EC2 t2.micro or t3.micro
- 5 GB of S3 Standard storage
- 750 hours/month of RDS db.t2.micro
- 1 million Lambda invocations/month (always free, forever)
- 400,000 GB-seconds of Lambda compute (always free)
- 25 GB of DynamoDB storage (always free)
Always-Free tier: Some services remain free indefinitely regardless of account age — Lambda, DynamoDB, CloudFront (1 TB/month), and others.
Cost Optimisation: Pricing Models
| Model | Discount | Best For |
|---|---|---|
| On-Demand | None (full price) | Unpredictable, short-term workloads |
| Reserved Instances (1yr) | Up to 40% | Steady, predictable workloads |
| Reserved Instances (3yr) | Up to 72% | Long-running, stable workloads |
| Savings Plans (Compute) | Up to 66% | Flexible — covers EC2, Lambda, Fargate |
| Spot Instances | Up to 90% | Fault-tolerant batch jobs, flexible timing |
AWS Cost Management Tools
AWS Cost Explorer
Visualise and analyse your AWS spending. Drill down by service, region, account, or tag. Forecast future costs based on trends. Identify the top cost drivers.
AWS Budgets
Set custom cost or usage budgets and receive alerts when you approach or exceed them. Types of budgets:
- Cost budget: Alert when spending exceeds a dollar threshold
- Usage budget: Alert when usage of a specific service exceeds a limit
- Reservation budget: Track RI/Savings Plan utilisation
AWS Pricing Calculator
Estimate the cost of a new architecture before you build it. Available at calculator.aws.
AWS Cost and Usage Report (CUR)
The most detailed billing data available. Delivered to S3 as CSV or Parquet. Used with Athena, QuickSight, or third-party tools for deep cost analysis.
AWS Cost Anomaly Detection
Uses machine learning to detect unusual spending patterns and alerts you automatically — useful for catching runaway resources.
Cost Allocation Tags
Apply tags to resources (e.g., Project=WebApp, Environment=Production) and activate them as cost allocation tags. Then filter billing reports by these tags to attribute costs to teams, projects, or environments.
AWS Support Plans
| Plan | Cost | Key Benefit |
|---|---|---|
| Basic | Free | Documentation, forums, limited Trusted Advisor checks |
| Developer | $29/month | Email support (business hours), full Trusted Advisor |
| Business | $100+/month | 24/7 phone/chat, <1 hour response for critical issues |
| Enterprise On-Ramp | $5,500+/month | Pool of TAMs, 30-min response for critical issues |
| Enterprise | $15,000+/month | Dedicated TAM, 15-min response, Concierge support |
Next: the AWS Shared Responsibility Model — the final and crucial concept that clarifies what AWS secures and what you are responsible for.