Cloud Cost Optimization – 10 Best Strategies to Reduce Cloud Cost

Written By Sambita Panigrahy  
Anuraag Singh
Approved By Anuraag Singh 
Published On November 16th, 2023
Reading Time 8 Minutes Reading

The cloud offers many benefits, including enterprise-grade infrastructure and services available for everyone. Its services come in a variety of price ranges where any business can fit its IT budget for availing of the high-demand services. However, due to mismanaged resources and other gaps in the system, the cloud spending of organizations significantly touches the sky. Thus, it’s very important to follow cloud cost optimization best practices for eliminating unnecessary outspending.

Follow the guide till the end to find out more information on cloud cost optimization and some of its best practices.

What is Cloud Cost Optimization?

Whenever opting for a cloud service, one goal every organization should have is to get the service with a minimized cost and maximized efficiency. How can it be achieved? The answer is simple – through proper cost optimization. In this way, organizations can analyze and optimize the use of cloud resources such as storage, processing power, and network bandwidth in a better way. Further, it can not only reduce costs but also enhance the overall performance & experience of the service.

In short, cloud cost optimization is a process through which one can reduce overall cloud costs by locating mismanaged resources, getting rid of waste, saving space for larger discounts, and scaling right-sized computing services.

Now, comes the question:

Why Cloud Cost Optimization is Important for Business?

First and foremost, businesses could save a great deal of money by optimizing cloud costs. As a result, the productivity of the workforce increases and improves operations.

Here are the benefits an organization can get by integrating cloud optimization standards:

  • Efficiency in the cloud is achieved when workload performance, compliance, and cost are continuously benchmarked against the best-fit infrastructure in real time. Using cloud optimization techniques improves the performance of your cloud environment by reducing the waste of resources as much as possible.
  • Cost Savings: Although there are many different types of cloud optimization, for many organizations, cost optimization is the most crucial one. Costs are reduced as a benefit of reducing cloud waste. 
  • Better visibility: Cloud optimization techniques use proven analytics to help you better understand your cloud environment. Thus, you can make data-driven choices. Utilizing optimization tools also improves cost visibility, giving your business a clearer understanding of cloud spending.
  • Enhanced Productivity: After implementing a cloud optimization approach, IT personnel will spend less time attempting to resolve issues because an optimized environment stops issues before they start.
  • Organizational Innovation & Efficiency: Implementing cloud optimization frequently results in a culture transformation within organizations, leading to better teamwork and decision-making.

Companies can cut costs on their cloud infrastructure without compromising service quality by implementing cost optimization measures. Numerous techniques, such as rightsizing, resource distribution, reserved instances, autoscaling, and others, can be used to reduce cloud computing expenses.

Fortunately, there are numerous best practices for reducing cloud costs.

Cloud Cost Optimization – 10 Proven Best Practices

You can lower the cost of your cloud environment by utilizing the best practices listed below:

1. Review Pricing and Billing Information

Cloud vendors provide billing details where they explain the cost of cloud services. You can use this information to identify high-cost areas and control outstanding amounts. Also, make sure to prioritize and analyze the high-spend services and workflows of your organization. Understanding the same allows you to make informed spending decisions and saves you from paying for repetitive resources.

2. Set Budgets

Unnecessary costs can be controlled by ensuring each one of the members knows the goals and budgets of each project. It’s advisable not to choose an arbitrary number. Rather, facilitate communication between engineering leaders, product leadership, and executives to make them understand cost requirements.

Basic requirements according to the intended packaging and delivery of products and characteristics. For example, find out if it’s a free trial or a commercial contract. Call these requirements a compromise during design and development with requirements such as speed and flexibility. 

Set a budget to plan on a monthly basis for your cloud computing strategy. This budget can vary based on the needs of your organization. The established budget is crucial for total cost planning and cost optimization. 

3. Identify Unused Resources 

 You can easily optimize your cloud costs by finding disconnected and unused resources. Administrators and developers sometimes provision a temporary server for a specific task and may forget to uninstall it after they are done. Alternatively, an administrator may forget to delete storage associated with completed cases. 

A cloud cost optimization strategy can help you identify unused and disconnected resources and remove them. As a result, you can avoid unnecessary costs.

4. Choose a single or multi-cloud deployment 

Multi-cloud deployments help avoid vendor lock-in and increase availability, but they can be expensive. With the help of one seller, you can benefit from discounts for large purchases. Switching between different cloud platforms can be difficult and requires additional training. That’s why it’s essential to analyze whether a single-vendor or multi-cloud environment meets your organization’s needs.

5. Right-Size the Services

Right-sizing allows you to analyze computing services and regulate them to the most environment-friendly size. However, it is challenging to manually dimension cases as there are many viable combinations, as well as memory, graphics, database, storage capacity, and throughput options.

You can use right-sizing tools to get exchange hints across instance families. In that way, you can limit cloud costs and optimize cloud usage, which will help you acquire peak overall performance from existing resources.

6. Use Reserved Instances

Reserved instances (RIs) are prepaid compute cases that provide significant pricing discounts. When purchasing RIs from a cloud provider, you choose an occasion kind and normally a region or availability sector and commit to using the occasion for a duration of 1 or 3 years. In exchange, most cloud companies offer discounts of up to 75%. Because you pay upfront, you should do the lookup and sketch based totally on your ancient instance usage. AWS also presents Savings Plans applications that offer comparable discounts but enable extra flexible usage.

7. Use Savings Plans

The Savings Plans pricing mannequin is bendy and helps you shop up to 70% on your AWS usage. This model affords consistently low prices, similar to RIs, based totally on one-year or three-year commitments.

8. Leverage Spot Instances

Unlike Reserved Instances, Spot Instances are reachable for last-minute purchases. AWS auctions its leftover sources at low prices. However, these instances are unreliable because they are now not constantly available and can sell out quickly. Point instances are useful for batch jobs or jobs that you can stop immediately, but not for critical and time-consuming jobs. 

9. Limit Data Transfer Fees

Migrating statistics to and from a public cloud can be expensive. Cloud companies often cost statistics egress costs to shift facts from their systems and once in a while between regions. You can decrease cloud expenses by way of keeping off needless information transfers.

Assess your cloud vendor’s transfer prices and regulate the cloud structure to reduce fundamental information transfers. For example, you can limit useless transfers by shifting on-premises functions that regularly get admission to cloud data to the cloud.

Evaluate the costs of the transfer methods supposed to be impenetrable and speed up data transfers between the cloud and private facts centers. You can compare the charges of the usage of a devoted network connection service, like AWS Direct Connect, Google Cloud Interconnect, or Azure ExpressRoute, to the costs of a physical transfer machine like AWS Snowball or Azure Data Box. 

10. Keep an Eye Out for Cost Anomalies

Set budgets, forecast AWS costs, and optimize cloud costs using the Cost Management console. This console includes a Cost Anomaly Detection feature that detects anomalous spending based on usage and costs. You can set up alerts to be notified when you approach or surpass your spending thresholds. 

What is the Next Step Toward Attaining Cloud Services for the Best Price?

Popular cloud service providers such as AWS, Microsoft Azure, and Google Cloud have approximately 500,000+ technical combinations and offer different prices for their customers. This certainly can overwhelm even the most experienced IT enterprises and well-versed business units. 

However, there are professional Cloud FinOps Services providers present who have a deep understanding of the cloud and can help your organization identify areas of improvement in your cloud for cost savings and efficiency. Through their holistic approach, they can help you create an optimization strategy for your organization.

Contact our Cloud Advisors now to request a customized demo. They will assist you in coming up with a well-suited cloud optimization strategy, give you additional tips for success, and walk you through the cloud cost optimization capabilities.


Q- What typical problems does cloud cost management face?

Overprovisioning resources, not being able to see consumption trends, allocating resources inefficiently, and having trouble projecting future expenditures are some of the challenges in managing cloud costs.

Q- What is the best way to find cloud resources that aren’t being used?

Experts suggest that to examine performance metrics and resource utilization, employ cloud monitoring tools. Seek out instances where the CPU, memory, or network use is regularly low.

Q- How can I reduce the cost of cloud storage?

If you don’t need to save data frequently, think about going with less expensive choices. To relocate or remove data automatically depending on usage patterns, implement data lifecycle policies.

Q- Which best practices exist for minimizing cloud costs?

Choose the right instance type for your workload in order to properly rightsize your instances. To dynamically modify resources in response to demand, use auto-scaling.