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An Overview of AWS VPC

AWS VPC or Amazon Virtual Private Cloud is a logically isolated virtual network in the cloud where you can securely launch your AWS resources. It creates a private network within the cloud environment where you can securely deploy your applications and data centers. You can customize this virtual private network with network configurations and routing tables to discharge traffic in and out of this private network. You can connect your VPCs to the internet, to on-premise data centers, or to other VPCs to facilitate easy access to your resources.

While there is no direct cost associated with the creation and usage of VPC, additional charges may be incurred for the resources utilized within the VPC. The pricing for AWS VPC depends on various factors including the type of resource, the amount of data transferred, and the specific AWS region. In this article, let us explore the various components used within the Virtual Private Cloud, its pricing, and cost optimization strategies to manage the cost of AWS VPC.

AWS VPC, How VPC works, Amazon VPC architecture
Source: AWS Docs

The Purpose of a Virtual Private Cloud

AWS VPC is a service that allows its users to create a secure and scalable cloud environment to run their business applications. It offers users the ability to create a segmented virtual network within the AWS ecosystem, providing the following key benefits:

  • Security: The isolated network protects your cloud resources from external threats and unauthorized access, ensuring that only the traffic that you allow reaches your network.
  • Customization: You can customize the network configuration in your VPC, such as the selection of IP address range, creation of subnets, configuration of route tables, and network gateways. This flexibility allows organizations to design a network that best suits their security, operational, and compliance needs.
  • Scalability: AWS VPC offers a scalable infrastructure that enables you to handle varying workloads. Thus, you can allocate and adjust your network resources based on the varying demands of your application.
  • Better Control of Your Resources: AWS VPC provides better control over your cloud resources, allowing you to manage your private IP and subnets, and the type of traffic that reaches your network. It also facilitates better traffic management by configuring route tables and network gateways.
  • Integration with other AWS Services: AWS VPC integrates with other AWS services such as Amazon EC2, RDS, and S3, enhancing the efficiency of AWS deployments. This integration ensures that AWS services can connect securely with each other within a defined virtual private network.

Getting Started with AWS VPC

Getting started with AWS Virtual Private Cloud (VPC) involves the following steps that allow you to set up a secure, scalable, and customizable virtual network within the AWS ecosystem.

Step 1:

AWS VPC Dashboard, Amazon Virtual Private Network
AWS VPC Dashboard

Step 2:

  • Configure your VPC by specifying a CIDR block (e.g., AWS allows the CIDR block to range from a /16 netmask to a /28 netmask.
AWS VPC Dashboard, Amazon Virtual Private Network
AWS VPC Parameters

Step 3:

  • Choose the number of subnets where you can place your resources. Choose the number of Availability Zones where you need to provision your subnets.
  • You can choose both private and public subnet.
AWS VPC Dashboard, Amazon Virtual Private Network
AWS VPC Parameters

Step 4:

  • Configure the NAT gateways. It allows the resources in your private subnet to connect with the internet and other AWS resources.
AWS VPC Dashboard, Amazon Virtual Private Network
AWS VPC Parameters

Step 5:

  • Choose Create VPC.
  • The VPC workflow gets triggered.
AWS VPC Dashboard, Amazon Virtual Private Network, Amazon VPC workflow
AWS VPC Workflow

Step 6:

Once the VPCs are provisioned, you can view them in the VPC dashboard.

AWS VPC dashboatd, VPC pricing
AWS VPC Dashboard

You can manage and scale your VPC as required, by adding or resizing subnets, adjusting route tables, and modifying security rules. The VPC Flow Logs help to monitor the network traffic within your VPC and ensure that your VPC is compliant with your organization’s security policies.

AWS VPC Pricing Explained

Understanding AWS VPC pricing is crucial for effective cloud cost management, especially as you scale your operations within the Amazon Web Services (AWS) ecosystem. AWS VPC itself does not incur a direct charge; however, various components associated with it incur costs based on usage. Here’s a breakdown of the primary factors that affect AWS VPC pricing:

1. Data Transfer

Data transfer cost is one of the main costs associated with AWS VPC, particularly egress charges. Your AWS resources within VPC incur charges when data moves across different regions or from AWS to the Internet:

  • Data Transfer Within the Same AWS Region: There is no charge for data transferred within the same AWS region. You can transfer data free of cost between services such as Amazon EC2, Amazon RDS, Amazon Redshift, Amazon S3, Amazon EBS, and Amazon DynamoDB within the same region.
  • Data Transfer Between Different AWS Regions: Inter-region data transfers are charged. For example, if data is sent from an EC2 instance in one region to an S3 bucket in another region, the data egress rates apply.
  • Internet Data Transfer: Data transferred from an AWS VPC to the internet incurs a fee, which varies depending on the total amount of data transferred out. The cost of data transfer can decrease significantly while transferring large volumes of data.

2. NAT Gateway

NAT Gateways enable instances in a private subnet to connect to the internet or other AWS services, ensuring that these instances are not reachable from the internet:

  • Hourly Charge: You pay an hourly charge for the duration that the NAT Gateway is available and provisioned for your use. The price charged per hour for a NAT gateway is $0.045.
  • Data Processing Charge: There is a charge for each gigabyte of data processed by the NAT Gateway. This is calculated in terms of both the data sent to and received from the internet. The cost of per GB of data processed is about $0.045.

3. VPC Peering

VPC Peering allows networking connections between two VPCs to route traffic between them using private IP addresses. Similar to other data transfer costs, AWS charges for inter-region VPC peering connections by the amount of data transferred.

4. VPN Connection

If you establish a VPN connection between your on-premises network and AWS VPC, there are associated costs:

  • VPN Connection Setup: A fixed hourly charge is incurred for each VPN connection.
  • Data Transfer Charges: Additional charges apply for data transferred over the VPN connection.

5. Elastic IP Addresses

While AWS provides one Elastic IP (EIP) for free as long as it is associated with a running instance and is being used actively, charges are incurred.

Charges apply for each additional EIP that is not attached to a running instance or if more than one EIP is assigned to a running instance. There is a small charge for remapping an EIP to a different instance more than 100 times in a month.

6. What is a public IPv4 address?

A public IPv4 address is an IPv4 address that is routable from the internet. A public IPv4 address is necessary for a resource to be directly reachable from the internet over IPv4.

Hourly charge for Public IPv4 Address, whether in use or idle, is $0.005.

7. AWS Direct Connect

Using AWS Direct Connect, users can establish a private connection between AWS and their on-premise data center. It incurs connection fees and data transfer charges.

  • Connection Fees: These are based on the bandwidth rate chosen for the connection (e.g., 1 Gbps, 10 Gbps).
  • Data Transfer Fees: Lower fees for data transfer compared to internet rates.

By carefully planning and understanding these components, users can effectively manage and optimize their AWS VPC costs. Our AWS Pricing Calculator helps you estimate and plan for these expenses based on individual usage patterns. This helps in avoiding surprises in billing and ensures a cost-effective deployment of services within AWS VPC.

8. IPAM (IP Address Management) Pricing

AWS IPAM is a tool that automates the management of IP addresses in your AWS environment. It simplifies the planning, tracking, and management of IP space across AWS Regions and accounts within an AWS Organization.

  • Hourly rate charged per active IP address managed by IPAM: $0.00027
  • You are charged for each active IP address assigned to resources such as EC2 instances or ENIs.

9. Traffic Mirroring Pricing

Traffic Mirroring is another advanced feature used to replicate the network traffic from elastic network interfaces (ENIs) of EC2 instances. It’s commonly used for content inspection, threat monitoring, and troubleshooting.

  • Hourly price per ENI: $0.015
  • You are charged per hour for each ENI enabled with traffic mirroring.

Cost Optimization Strategies to Manage AWS VPC

Optimizing costs within an AWS Virtual Private Cloud is crucial for running cost-effective cloud operations. Let us discuss some methods to optimize your VPC costs.

Right-size your VPC resources: Evaluate the performance requirements of your applications to determine the appropriate size for each resource. Remove any underutilized or unwanted resources such as oversized EC2 instances, idle NAT gateways, or VPN connections.

Use resource tagging: Establish clear tagging policies that can provide insights into your AWS spending. Tagging helps you categorize and track your resources, enabling better cost allocation and management. Applying meaningful tags can help you to analyze all your resources and find areas of improvement.

Optimize data transfer: Use compression techniques and convert data into formats that require less bandwidth to minimize data transfer costs. Minimize unnecessary data transfers between Availability Zones or across AWS regions. Take advantage of AWS Direct Connect or VPN connections efficiently for data transfer to and from your VPC.

Utilize VPC Peering: Consider using VPC peering for communication between VPCs. AWS VPC Peering allows two VPCs to connect directly to each other without routing through the public internet, improving security and reducing latency. This direct connection can be between VPCs in the same region or across different regions.

Optimize IP address usage: Review and manage IP address allocation within your VPC. Effective management of IP addresses ensures that resources are not wasted. Release unutilized IP addresses to avoid unnecessary charges for IP Address Manager (IPAM).


With the above cost optimization techniques, organizations can improve the efficiency and cost-effectiveness of their AWS infrastructure. Also by utilizing monitoring tools like AWS Cost Explorer, users can analyze your VPC costs, identify usage patterns, and find potential cost-saving opportunities.

With careful planning and strategic monitoring of AWS VPC usage, businesses can enjoy the flexibility and scalability of AWS while managing costs effectively. Furthermore, integrating FinOps practices for your cloud environment allows you to utilize your cloud services to their full potential.

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Heera Ravindran

Content Marketer at Economize. An avid writer and a zealous reader who specializes in technical content and has a passion for all things Cloud and FinOps.

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