Cloud FinOps

Chapter 12. Paying Less: Rate Optimization

While usage optimization is about reducing resource usage to avoid costs, rate optimization is about paying less for the resources you continue to use.

By now, you know that not all cloud providers are created equal. With multiple purchasing options, billing in different time increments, and a slew of payment structures and commitments, each provider brings with it a variety of financial ramifications for customers. In this chapter, we’ll cover some of the pricing options. Reserved Instances (RIs) and Committed Use Discounts (CUDs) are quite complex, so we’ll save those for Chapter 13.

Compute Pricing

Depending on the cloud service provider and the resources you’re using, there can be many ways to pay. Different cloud service providers also use different terms for similar pricing offerings. First, let’s take a quick look at the big three providers in Table 12-1.

Table 12-1. Comparison of reservation options across the big three cloud service providers

	AWS	Google	Azure
Public price	On-demand	On-demand	Pay as you go
Spot	Spot	Preemptible	Low-priority VM
Sustained use discount	N/A	Sustained Use Discount	N/A
Reserved	Reserved Instances/Savings Plans	Committed Use Discount	Reserved VM Instances
Volume discounts	Volume discounts	Volume discounts	Volume discounts

On-Demand

When you request a normal resource and run it without making any precommitments (like reservations), you’re charged the list price, or the on-demand ...