AWS Academy Cloud Foundations

Module 2: Cloud Economics and Billing

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Module overview

Topics Activities
• Fundamentals of pricing • AWS Pricing Calculator
• Total Cost of Ownership • Support plans scavenger hunt
• AWS Organizations
• AWS Billing and Cost Management
• Technical Support

Demo
• Overview of the Billing Dashboard

Knowledge
check
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Module 2: Cloud Economics and Billing

Section 1: Fundamentals of pricing

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AWS pricing model
Three fundamental drivers of cost with AWS

Comput Storag Data

e e transfer
• Charged per hour/second* • Charged typically per GB • Outbound is aggregated
and charged
• Varies by instance type
• Inbound has no charge
(with some exceptions)
*Linux only • Charged typically per GB

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How do you pay for AWS?

Pay for what you Pay less when you Pay less when you
use reserve use more and as
AWS grows

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Pay for what you use
Pay only for the services that you consume, with no large
upfront expenses.

On AW
premises S

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 Pay less when you reserve

Invest in Reserved
Instances (RIs):
• Save up to 75 percent
• Options: EC2
• All Upfront Reserved instance
Instance (AURI) 🡪
largest discount
• Partial Upfront
Reserved Instance On NURI PURI AURI
(PURI) 🡪 lower Demand
discounts
• No Upfront Payments
Reserved Instance
(NURI) 🡪 smaller
discount

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 Pay less by using more
Realize volume-based discounts:
• Savings as usage increases.
• Tiered pricing for services like Amazon
Simple Storage Service (Amazon S3),
Amazon Elastic Block Store (Amazon
EBS), or Amazon Elastic File System
(Amazon EFS) 🡪 the more you use, the
less you pay per GB.
• Multiple storage services deliver lower
storage costs based on needs.

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 Pay even less as AWS grows

As AWS grows:

• AWS focuses on lowering cost of doing business.

• This practice results in AWS passing savings from
economies of scale to you.
• Since 2006, AWS has lowered pricing 75 times (as of
September 2019).
• Future higher-performing resources replace current
resources for no extra charge.

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Custom pricing

• Meet varying needs through custom pricing.

• Available for high-volume projects with unique
requirements.

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AWS Free Tier

Enables you to gain free hands-on experience with the AWS

platform, products, and services. Free for 1 year for new customers.

Sign up for Learn with 10- Start

an minute building
AWS account tutorials with AWS
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Services with no charge

Amazon VPC

Elastic Beanstalk**

Auto Scaling**

AWS CloudFormation**

AWS Identity and Access **Note: There might be

Management (IAM) charges associated with
other AWS services that are
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 • There is no charge (with some
Key takeaways exceptions) for:
• Inbound data transfer.
• Data transfer between services
within the same AWS Region.
• Pay for what you use.
• Start and stop anytime.
• No long-term contracts are
required.
• Some services are free, but the
other AWS services that they
provision might not be free.
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What is Total Cost of Ownership (TCO)?

Total Cost of Ownership (TCO) is the

financial estimate to help identify direct and
indirect costs of a system.

Why use TCO?

• To compare the costs of running an
entire infrastructure environment or
specific workload on-premises versus
on AWS
• To budget and build the business case
for moving to the cloud
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TCO considerations
Hardware: Server, rack chassis Facilities cost
Software: Operating system
power distribution units (PDUs),
1 Server top-of-rack (TOR) switches
(OS), virtualization licenses
Costs (and maintenance) Space Power Cooling
(and maintenance)

Hardware: Storage disks, Facilities cost

2 Storage storage area network (SAN) or Storage administration costs
Costs Fibre Channel (FC) switches Space Power Cooling

Network hardware: Local area Facilities cost

3 Network Costs network (LAN) switches, load Network administration costs
balancer bandwidth costs Space Power Cooling

4 IT Labor Server administration costs

Costs

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On-premises versus all-in-cloud
You could save up to 96 percent a year by moving your infrastructure to AWS.
Your 3-year total savings would be $159,913.
Server Storage Network IT-Labor Total
400000

350000

300000

250000

200000

150000

100000

50000
AWS cost includes business-level support and 0
a 3-year PURI EC2 instance On-Premises AWS
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 AWS Pricing Calculator

Use the AWS Pricing Calculator to:

• Estimate monthly costs
• Identify opportunities to reduce
monthly costs
• Model your solutions before building
them
• Explore price points and calculations
behind your estimate
• Find the available instance types and Access the AWS Pricing
contract terms that meet your needs Calculator
• Name your estimate and create and
name groups of services
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Reading an estimate
Your estimate is broken into: first 12 months total, total upfront, and total monthly.

First 12 months total Total upfront Total monthly

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Additional benefit considerations

Hard benefits Soft Benefits

• Reduced spending on compute, • Reuse of service and
storage, networking, security applications that enable you to
define (and redefine solutions)
• Reductions in hardware and by using the same cloud service
software purchases (capex)
• Increased developer productivity
• Reductions in operational costs,
backup, and disaster recovery • Improved customer satisfaction
• Reduction in operations personnel • Agile business processes that
can quickly respond to new and
emerging opportunities
• Increase in global reach

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Case study: Total Cost Of Ownership
Background: • Growing global company with over 200 locations
• 500 million customers, $3 billion annual revenue

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Case study: Total Cost of Ownership
Background: • Growing global company with over 200 locations
• 500 million customers, $3 billion annual revenue

Challenge: • Meet demand to rapidly deploy new solutions

• Constantly upgrade aging equipment

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Case study: Total Cost of Ownership
Background: • Growing global company with over 200 locations
• 500 million customers, $3 billion annual revenue

Challenge: • Meet demand to rapidly deploy new solutions

• Constantly upgrade aging equipment

Criteria: • Broad solution to handle all workloads

• Ability to modify processes to improve efficiency and lower costs
• Eliminate busy work (such as patching software)
• Achieve a positive return on investment (ROI)

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Case study: Total Cost of Ownership
Background: • Is a growing global company with over 200 locations
• Have 500 million customers, $3 billion (USD) annual revenue

Challenge: • Meet demand to rapidly deploy new solutions

• Constantly upgrade aging equipment

Criteria: • Have a broad solution to handle all workloads

• Be able to modify processes to improve efficiency and lower costs
• Eliminate busy work (such as patching software)
• Achieve a positive return on investment (ROI)

Solution: • Moved their on-premises data center to AWS

• Eliminated 205 servers (90 percent)
• Moved nearly all applications to AWS
• Used 3-year Amazon EC2 Reserved Instances
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Case study: Total Cost of Ownership

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Case study: Total Cost of Ownership

Business Goals:
Growth
Enhanced 24/7 business
Results: Operational efficiency

Resource Speed to market Operational

optimization • One day to provision efficiency
new businesses
• Robust security • Continuous cost
compliance • Just minutes to push out optimization and
a service reduction
• Enhanced disaster
recovery
• Increased computing
capacity
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Introducing AWS Billing and Cost
Management

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AWS Billing Dashboard

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Tools

AWS Budgets AWS Cost and Usage Report AWS Cost Explorer

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Monthly bills

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Cost Explorer

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Forecast and track costs

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Cost and usage reporting

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Thank you

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