Cloud FinOps, 2nd Edition

Chapter 16. Paying Less: Rate Optimization

In Chapter 5, you learned that your Cloud Cost = Rates × Usage. The previous chapter looked at how to manage the usage part of the equation—using resources in the size you need, and only when you need them. This chapter and the two that follow focus on the other half of that equation, and cover how to optimize rates to pay less for the resources you continue to use.

This work will primarily be managed by the centralized FinOps function for your organization, which has the highest-level view of your organizational cloud usage, the specialized skills and knowledge to purchase these specialized discounts, and the responsibility to manage your cloud rates across the business.

By now, you know that a dollar is not a dollar when paying for cloud. With multiple purchasing options, billing in different time and volume increments, a slew of payment structures and commitment options, and unique differences from each cloud provider, customers have a panoply of purchasing options, each of which has its own unique financial ramifications. This chapter covers the basics of the pricing options you can use to manage your rates. Reservations, Savings Plans (SPs), Reserved Instances (RIs), Committed Use Discounts (CUDs), and Flexible CUDs are the primary levers for adjusting rates for many services, but they can be quite complex, so we talk about those specifically in Chapter 17. Then, in Chapter 18, we talk about strategies you can use to bring all of ...