Cost Optimization Strategies for Compute Instances

Cost Optimization Strategies for Compute Instances banner image
January 4, 2019

The study says 50-to-80% of cloud bills come from Instances or Virtual Machines. And this cost can be minimized up to 40% if a proper resource management strategy is followed.

While choosing the Instances (or VMs), most companies consider the maximum expected load their infrastructure may be subject to. This approach is ideal in the on-premise IT modal because their hardware cannot be instantly upgraded according to load. But when it comes to cloud computing, this is not the case. And this is what makes cloud computing interesting. Here the infrastructure resources can be automatically and instantaneously scaled (both expand and shrink) depending upon the need. So while choosing the instances in cloud computing, the clients need to understand that their infrastructure will not need all the resources. And that is why they should plan resource management strategies accordingly to cut down their expenses on the cloud.

So let’s discuss some common Cost Optimization Strategies for Compute Instances to save unnecessary expenses on Instances in cloud bills.

Cost Optimization Strategies for Compute Instances

Identifying Untapped Instances:

Selecting instances according to the maximum expected load on the network is a key reason causing high instance bills to the clients. It needs to understand, generally, not all instances are used at the same time. So it is important to identify idle (unused) instances and turn them off. For example, you have created an ‘n’ number of instances where one instance costs 0.2 dollars per hour. And you have used only n-2 instances during a certain time in a day. If this happens one day for 5 hours, the loss will be 2 dollars (2*(0.2*5)) per day. But if this happens with more instances for more numbers of hours in a month, in that case, the loss will be higher. So turning them off will avoid the billing of your unused instances and save you from paying for them.

Search for Higher Discount:

Cloud providers offer a high percentage of discounts if a client promises to use their service in the long run. So before selecting the instances, research and select the most appropriate package.

For example, AWS on its EC2 Reserved Instances (RI) provides a maximum of 75% discount compared to its on-demand instances. There are three categories of RIs standard RIs, Convertible RIs, and Scheduled RIs. And the discounts offered to them by AWS are also different.

EC2 Reserved Instances provides per-hour billing with an optional capacity reservation on EC2 instances. When the attributes of EC2 instances match the attributes of active RIs, AWS billing automatically applies the discounted rates. You can also get a discount by choosing region-scoped RIs.

Use AWS Spot:

AWS spot instance allows you to optimize the cost and helps in scaling the throughput of your applications around ten times. Here you pay the spot price in effect for the time period your instances are running. According to Amazon, AWS Spot instances allows users to save up to 90% compared with on-demand prices. AWS provides a tool called Spot Instant Advisor to compare the pricing of Spot Instance against On-Demand rates.


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