How to Amortize Your EC2 Reserved Instance Cost

Oct 14 2013 | by Zev Schonberg

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In the world of AWS billing, there are different types of payments – one-time fees, recurring usage charges, and usage fees that are charged upfront. When it comes to managing your cloud cost and capacity, this level of variety can create some confusion.

Do You Know Where Your One-Time Fees are?

When you purchase Amazon cloud reservations (for either EC2 or RDS), you pay a one-time, upfront fee that appears in your AWS bill only once – in the month that you purchase the reservation. After that, it disappears from sight and possibly from memory.

This can be problematic for cost trending and planning, where months down the road while trying to figure out your cloud cost, you might have totally forgotten about those one-time fees.

Amortized Cost Reports for EC2 Reserved Instances

To address this issue, Cloudyn offers amortized cost reports. For example, in these reports you can see all your EC2 costs, including those one-time fees broken up or amortized over the life of the reservation. This allows you to really understand your true costs for EC2 clearly itemized at all times.

Amortized EC2 Reserved Instance for AWS

FYI – Heavy Reservations and AWS Support are Different

Unlike light or medium reservations, for heavies, you pay the one-time upfront fee plus the hourly usage fees even if you never use any of the reserved instances (this little factoid is buried way down in the pricing section of AWS’ reservation page). So when you sign-up for Heavy Utilization, Amazon already knows how much your bill will be, as they will charge the hourly rates irrespective of your actual usage. In practice, this will be reflected in your AWS bill with the full monthly fee for usage being charged at the beginning of the month. The same is true for AWS Support. They charge the entire amount upfront.

The Boy Who Cried Wolf

While Amazon’s reporting method for Heavy Utilization reservations and Support is accurate, it skews things for trending purposes. Costs that are only fully incurred by the end of the month already appear on the first day, creating a spike that doesn’t really exist.

This kind of noise makes it difficult to practice IT change management in a meaningful way. These artificial spikes can confuse users who then become jaded and ignore anomalies that really do represent a serious breach of usage or spending.

Keeping it Simple

While AWS billing shows the entire month’s Heavy RI usage cost and Support costs upfront, Cloudyn breaks the cost up per day as a reflection of usage. This makes it easier to view and understand all your costs within a consistent and clear framework. Of course, once you are able to understand your usage and costs, you can then get to work on ensuring that your overall consumption is optimized for maximum ROI.

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