5 Benefits of Using AWS Cost Categories for Effective Cost Optimization

What are AWS Cost Categories?

Running a business on the AWS cloud can be an efficient and cost-effective way to manage resources, but with so many services available, it can be challenging to keep track of expenses. This is where AWS Cost Categories come in. AWS Cost Categories allow businesses to categorize their AWS costs, making it easier to understand where their money is being spent and how to optimize their costs.

How do AWS Cost Categories work?

Cost Categories allow organizations to categorize their AWS costs into meaningful and actionable groups. This allows organizations to view their AWS costs at a higher level, rather than just looking at individual line items. By using Cost Categories, organizations can better understand where their AWS costs are coming from, how much they are spending on different types of resources, and how they can optimize their AWS spending.

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AWS Cost Categories & Examples

The following are a few examples of AWS Cost Categories that businesses can use to categorize their AWS costs:

Compute – Compute costs refer to the resources used for running instances, including EC2 instances, AWS Lambda, and AWS Elastic Beanstalk. These resources are used to run applications and perform tasks such as processing, rendering, and serving content.

Storage – Storage costs refer to the resources used for storing data, including Amazon S3, Amazon EBS, and Amazon Glacier. These resources are used to store and manage data such as documents, images, and backups.

Database – Database costs refer to the resources used for managing databases, including Amazon RDS, Amazon DynamoDB, and Amazon Redshift. These resources are used to store, manage, and analyze data in a structured format.

Networking – Networking costs refer to the resources used for connecting instances, applications, and services, including Amazon VPC, Amazon Direct Connect, and Amazon Route 53. These resources are used to manage and secure network connections and traffic routing.

Migration – Migration costs refer to the resources used for migrating data and applications to the cloud, including AWS Migration Hub, AWS Application Discovery Service, and AWS Server Migration Service. These resources are used to move data and applications from on-premise environments to the cloud.

Management Tools – Management tools costs refer to the resources used for managing and monitoring AWS services, including Amazon CloudWatch, Amazon CloudFormation, and AWS Systems Manager. These resources are used to manage and monitor resources, automate tasks, and manage configurations.

In addition to the default AWS Cost Categories, you can also create Custom Cost Categories to better align with your specific needs and business requirements. Custom Cost Categories allow you to create Cost Categories that are specific to your AWS usage, so that you can better understand your AWS costs and make informed decisions about how to optimize your AWS spending.


Prerequisites & How to Apply AWS Cost Categories

Before using AWS Cost Categories, it is important to understand the following components and concepts:

Cost Category Name: The Cost Category Name is the name that you assign to a specific Cost Category. This name should be descriptive and easy to understand, so that you can easily identify the Cost Category when reviewing your Cost Reports.

Rule Types: AWS Cost Categories support two rule types: simple and advanced. Simple rules are based on a single dimension, such as the service, while advanced rules allow you to specify multiple dimensions, such as the service, region, and usage type.

Cost Category Value: The Cost Category Value is the value that is assigned to a Cost Category. This value represents the percentage of your total AWS costs that are assigned to the Cost Category.

Dimensions: Dimensions are the characteristics of your AWS usage and costs that you can use to categorize your costs. AWS Cost Categories support a number of dimensions, including service, region, and usage type. By using dimensions, you can create more specific and accurate Cost Categories, which can help you better understand your AWS costs and make informed decisions about how to optimize your AWS spending.


How to Apply Cost Categories?

Using AWS Cost Categories is straightforward and easy. Here is a step-by-step guide on how to set up and use AWS Cost Categories:

  • Log in to your AWS Billing Console: The first step is to log in to your AWS Billing Console.
  • Create Cost Categories: Once you have logged in, you can create Cost Categories by clicking on the “Create Cost Category” button. You will then be asked to provide a name and description for the category.AWS Cost Categories, Billing Dashboard, Cost Explorer, Cost Category, Pricing, Examples, Guide
  • Assign costs to Cost Categories: To assign costs to a Cost Category, you will need to select the desired costs and then choose the appropriate Cost Category from the dropdown menu.

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  • View Cost Reports: Once you have assigned costs to Cost Categories, you can view your costs by Cost Category by selecting the “Cost Reports” option in the AWS Billing Console. You can also customize your Cost Reports to show the specific data that is most relevant to you.
  • Set Cost Alerts: To help you stay on top of your AWS costs, you can also set cost alerts in AWS Cost Explorer. You can set alerts for specific Cost Categories, or for your overall AWS spending.

Differences between AWS Cost Categories

While the different types of AWS Cost Categories serve different purposes, they also have some feature differences between them. The key differences are listed below:

  • Compute costs are focused on running applications and performing tasks
  • Storage costs are focused on storing and managing data
  • Database costs are focused on storing and analyzing structured data
  • Networking costs are focused on managing network connections and traffic routing

It’s important for businesses to understand these differences and use the appropriate cost categories for their specific needs. By doing so, they can better track and manage their AWS costs, and make informed decisions about how to optimize their usage and reduce costs.


Benefits & Advantages of using AWS Cost Categories

Using AWS Cost Categories offers numerous benefits and advantages, including:

  1. Better Cost Visibility: By categorizing AWS costs, businesses can get a clear picture of how they are spending their money and identify areas where they can optimize their usage and reduce costs.
  2. Improved Cost Allocation: AWS Cost Categories allow businesses to allocate their costs across different departments, teams, and projects, making it easier to track and manage budgets.
  3. Better Cost Management: By categorizing costs, businesses can create customized cost reports and alerts that help them identify trends and unexpected costs. They can also use this information to make informed decisions about how to optimize their usage and reduce costs.
  4. Enhanced Cost Optimization: By using AWS Cost Categories, businesses can easily identify areas where they can optimize their usage and reduce costs. For example, they can identify and shut down unused instances, choose cost-effective storage options, or reduce database usage during off-peak hours.
  5. Increased Collaboration: AWS Cost Categories make it easier for teams to collaborate and share information about costs. This helps to ensure that everyone is on the same page and working towards the same goals.

Conclusion

In conclusion, AWS Cost Categories are a powerful tool for businesses to categorize and better understand their AWS costs. By using them, businesses can improve cost visibility, allocation, and management, as well as enhance cost optimization and collaboration.

So, the next time you’re trying to figure out where all your AWS expenditure is going, remember to turn to AWS Cost Categories! They’ll give you a clearer picture of your costs and help you make more informed decisions about how to optimize your usage and reduce expenditure.