Trying to control organizational costs is not an easy task for any business owner as it can be quite difficult to know where to start. But there are ways to reduce your organizational costs without affecting the quality of your output, starting with managing your cloud costs.
By keeping an eye on a few aspects of your cloud computing strategy, you can reduce your operating costs and save massively on your bills. With AWS EC2, this includes assessing cost aspects of on-demand instances, dedicated instances and spot instances and seeing where you can make savings.
On-demand pricing
With on-demand instances, compute capacity can be purchased by the hour. But there are a few things you need to look out for, including how prices vary according to AWS region and operating system used.
For example, a t2.small instance on a Linux operating system within the US East (N. Virginia) AWS region is priced at $0.026 per hour when purchased on demand. But when we go to the West coast to Northern California, the price increases to $0.034 per hour.
Looking at these numbers, the difference in pricing doesn’t look like a lot. But let’s put this in a situational context. Say a company in Northern Virginia provision 100 t2.small instances to run for 40 hours per week every month. That comes up to $4,992 per year. But if the same company was operating in Northern California with the same EC2 demands, the cost would be $6,528. So running these instances from the East to West coast, the cost increases by around $1500.
And if this company was using a Windows operating system, the cost in Northern Virginia would be $6,912 per year. The cost in Northern California would be $8,448 – that’s almost double the cost compared to a Linux operating system on the East coast.
So when purchasing AWS instances, keep in mind the regional costs of that instance and the operating system you are using. This is especially important for start-ups who need to keep tight control over their finances and ensure resources are used wisely.
Dedicated instances
Dedicated instances are a form of EC2 instances that are dedicated to you as a single customer. These instances are physically isolated from any instances you have provisioned that are not dedicated, and are isolated from instances belonging to other AWS accounts.
You can launch these instances from dedicated hosts, allowing you to consistently use the same server over and over again. This way you can ensure that you are adhering to corporate standards and regulatory requirements concerning visibility over instance location.
And when it comes to pricing, regardless of the size of instances you provision, you pay hourly for each dedicated host that is active and aren’t billed for instance usage. But keep an eye out for the new Reservation pricing that AWS will be releasing, which promises a discount of up to 70% compared to on-demand prices.
Spot instances
Spot instances are a great way to obtain EC2 instances without breaking the bank. Essentially you bid on unused EC2 instances at prices set by AWS that change according to demand. What’s great about spot instances is that you can reduce your operating costs by up to 90% compared to on-demand instances.
But there are a few things you need to look out for with spot instances. The price for instances can vary based on the overall demand for instances, so you may end up seeing price hikes and pay a little more than you would like when demand is higher.
The other thing is that if the spot price increases above your bid for that instance, AWS will terminate that instance. But don’t worry as AWS will give you a termination notice before they terminate the instance. So as long as you keep track of these factors, you should be able to save on your AWS bills and reduce your costs.
There are also other ways to save on your AWS EC2 bills, including the use of cloud management software such as Cloud Machine Manager (CMM). CMM is the cloud on-off switch that gives you greater control of when your EC2 servers are turned on and off.
With CMM, you can schedule and automate your server activity as well as turn your servers off instantaneously, with the potential to save enough money to reinvest in provisioning bigger and better servers.
To see how much you can save with Cloud Machine Manager, check out our savings estimator.
