Introduction to AWS Billing and Cost Management Tools: Part 2 of 3

Cost management in the cloud is a never-ending exercise for operation managers. Fortunately, there are some tools which can help companies get started in the right direction. Let’s take a closer look at them.

In part 1 of our three-part series, we introduced some of the AWS billing and reporting tools. We saw how those tools can be used to understand infrastructure spending at a more granular level. Some of the reports can be loaded into third-party analytical tools for further analysis.
As companies start to analyze their spending patterns from billing reports, they start thinking about optimization. The big questions they try to answer include the following broad categories:

  • How can we keep our spending within a reasonable limit?
  • How can we start optimizing costs? Where do we start?
  • How can we forecast future spending?

In this part of the series, we will introduce some of the cost management tools already available from AWS that can help answer some of these important questions.

Creating Billing Alerts

One of the first things companies need to do after transitioning to AWS is enabling billing alerts. AWS billing alerts enable us to set a threshold for monthly spending and receive notifications when spending exceeds that threshold.

This is proactive cost monitoring. If there is a consistent pattern of billing alerts every month, it means either the threshold (and perhaps the infrastructure budget) is too low for the normal, expected workload, or there is a good argument for scaling back current resource consumption.
An early response to billing alerts means there are no nasty surprises at the end of the month when the company credit card is charged.

Billing alerts can be enabled from the AWS Billing and Cost Management console’s Preferences tab. Once enabled, it can’t be deactivated. In the image below, we have enabled this feature:
Enabling AWS Billing Alerts
Once enabled, you can create an alert from the AWS CloudWatch console. Billing alerts can be created only from the US-East (North Virginia) region; however its monitoring would include costs from resources running in every region. If you try to create a billing alert from CloudWatch in any other region, you will receive a message like this:
AWS Billing Alerts can be set from only US-East
In the image below, we are creating a billing alarm from the CloudWatch console in US-East region. As you can see,  billing alarms can be based on:

  • Estimated total charge for the current account.
  • Estimated total charge for one or more linked accounts.
  • Estimated charges for one or more AWS service consumed by the current account.
  • Estimated charges for one or more AWS service consumed by one or more linked accounts.

AWS Billing Metric types
Here, we are interested in the total estimated charge in USD for the current account. In the alert definition, we are setting up a threshold of US $1,000 and want CloudWatch to send us an alert when the current month’s spending goes above that limit.
AWS Billing Alert properties
We had to create an SNS topic called AWS_Billing_Notification first and confirm its subscription before creating the alarm. In this case, the SNS topic would send notifications to an e-mail subscription, which could be our accounts payable department.
Also, note how CloudWatch lets us perform an auto-scaling operation in response to the alarm. This can be useful for specific use cases. For example, if we are running a busy site during a particular campaign or promotion season, we could be using multiple servers in a farm to keep up with higher-than-normal traffic.
Not surprisingly, this would also mean extra spending. However, we would want to keep the spending within our limit as well. With billing alerts, we can use auto scaling actions where the number of servers in the farm would be reduced once the spending hits the US$ 1,000 mark.
Once set up, the monitoring is automatic. Every time the spending threshold is reached, an e-mail like the following would be sent to the address specified:

You are receiving this email because your  estimated charges are greater than the limit you set for the alarm "AWS-EstimatedCharges-Alarm" in AWS Account XXXXXXXXXXXX.
The alarm limit you set was $ 1000.00 USD. Your total estimated charges accrued for this billing period are currently $ 1020.26 USD as of Thursday 16 June, 2016 17:37:52 UTC. The actual charges you will be billed in this statement period may differ from the charges shown on this notification. For more information, view your estimated bill at: https://console.aws.amazon.com/billing/home#/bill?year=2016&month=6
More details about this alarm are provided below:
---
Amazon CloudWatch Alarm "AWS-EstimatedCharges-Alarm" in the US East - N. Virginia region has entered the ALARM state, because "Threshold Crossed: 1 datapoint (1020.26) was greater than or equal to the threshold (1000.0)." at "Thursday 16 June, 2016 17:37:52 UTC".
View this alarm in the AWS Management Console:
https://console.aws.amazon.com/cloudwatch/home?region=us-east-1#s=Alarms&alarm=AWS-EstimatedCharges-Alarm
Alarm Details:
- Name:                      AWS-EstimatedCharges-Alarm
- Description:                CloudWatch Alarm for Estimated Charges
- State Change:              OK -> ALARM
- Reason for State Change:    Threshold Crossed: 1 datapoint (1020.26) was greater than or equal to the threshold (1000.0).
- Timestamp:                  Thursday 16 June, 2016 17:37:52 UTC
- AWS Account:                XXXXXXXXXXXX
Threshold:
- The alarm is in the ALARM state when the metric is GreaterThanOrEqualToThreshold 1000.00 for 21600 seconds.
Monitored Metric:
- MetricNamespace:            AWS/Billing
- MetricName:                EstimatedCharges
- Dimensions:                [Currency = USD]
- Period:                    21600 seconds
- Statistic:                  Maximum
- Unit:                      not specified
State Change Actions:
- OK:
- ALARM: [arn:aws:sns:us-east-1:XXXXXXXXXXXX:AWS_Billing_Notification]
- INSUFFICIENT_DATA:

Creating Budgets

Closely related to billing alerts are budgets. This is a comparatively new feature and also available from the Billing and Cost Management console. Budgets in AWS serve the same purpose as they do in our daily lives.
They’re a way to pre-allocate funding for your AWS spending and allow for monitoring the actual usage against the allocated value.

Like billing alerts, the budgeting feature needs to be enabled first (see below) and once enabled, you cannot turn it off.
Enabling Budget
In the image below, we are creating a budget for an AWS account.  The wizard is fairly simple:

  • We are budgeting for two specific services: namely, EC2 instances and EBS volumes.
  • We are budgeting for the next six months (June to December).
  • We have a budget of $1,500 per month to spend for these services.
  • We would like to be notified when our actual spending has gone 2% over our budgeted amount.
  • We would like to be notified when our forecasted spending goes 2% over our budgeted amount.
  • The alarm notification should be sent to our accounts payable department’s e-mail address (behind the scene, AWS creates a CloudWatch alarm for this).

Creating an AWS budget
Once the budget is created, it’s visible from the Budget console. Notice how the status bar gives a visual representation of current spending against the budgeted value.
An AWS budget
Individual AWS services apart, you can create budgets for the following categories:

  • Specific API operation(s) against an AWS service: for example, you can budget for S3 PutObject requests.
  • Availability Zone: For example, your primary data center in ap-southeast-2a should have more costs allocated than ap-southeast-2b and  ap-southeast-2c. You can budget for low spending in those two AZs.
  • Linked accounts: If each department or business unit in your company has a separate AWS account, you can link them all to a master account which pays the consolidated bill at the end of the month. Using this feature, you can set budgets for each linked account.
  • Purchase option: With this type of budget you can decide how much you want to spend on on-demand instances and reserved instances.
  • Tag: You can budget for resources with a specific tag. For example, if each resource used in your development environment has a type tag of “DEV”, you can use that tag in the budget. That way you can budget for your development infrastructure. Another example could be a tag which identifies the business owner of a resource, say the marketing department. Using that tag, you may want to budget for the marketing department’s resource usage during a campaign season.

A few more things to be mindful about budgets:

  • By default, only two budgets are allowed per account. In our opinion, this is fairly restrictive.
  • Once a budget is created, it can’t be modified, it can only be deleted. This is restrictive as well.
  • With notification options (actual or forecasted spending against budgeted value), AWS creates necessary CloudWatch alarms and associated SNS topics behind the scene. However, these alarms are subject to AWS account limits. By default, an AWS account can have ten alarms per month for free. If you already have a large number of alarms configured, the budget alarms may actually cost you extra charges.

Cost Allocation Tags

While budgets and alerts can help keep costs down, cost allocation tags enable IT departments to apportion the total AWS bill to various internal and external customers. The traditional IT shop usually hosts a number of resources for different costs centers (sales, marketing, finance, corporate apps, HR etc.), projects or teams (application developers, business analysts, service desk or training). Specific tags can be added to each of these resources to identify or associate them with specific business owner or purpose.
For example, an EC2 instance can have two tags: “Owner” and “Environment” with values of say, “HR” and “Production” respectively. When cost allocation tags are enabled, AWS will generate a cost allocation report with the total monthly bill broken down by the enabled tags.  This is a CSV file created in an S3 bucket. In this particular example, if both the “Owner” and “Environment” tags are enabled, the report can show what IT should be charging back HR for hosting their production server.
In the image below, we can see three tags are enabled for cost allocation report.
AWS Cost Allocation Tags

What’s Next?

We have now seen how to create a threshold and a budget for limiting our spending in the AWS cloud and how to proactively recoup infrastructure costs from customers consuming IT services.  As we will see in the next and final part of this series, there are more sophisticated tools available for identifying optimization opportunities and take advantage of price reductions from AWS.
Read part 3 now!

 

Avatar

Written by

Sadequl Hussain

Sadequl Hussain is an IT pro based in Sydney, Australia. He comes from a strong database administration backround and has more than 15 years of experience in development, database management, training, and technical writing. Sadequl also holds a number of vendor certifications, including one from AWS. He loves working with cloud technologies, NoSQL / Big Data databases, automation toolsets, open source technologies and Windows / Linux system administration. When he is not doing any of these, Sadequl loves to spend time with his young family.

Related Posts

Avatar
Jeremy Cook
— September 17, 2019

Cloud Migration Risks & Benefits

If you’re like most businesses, you already have at least one workload running in the cloud. However, that doesn’t mean that cloud migration is right for everyone. While cloud environments are generally scalable, reliable, and highly available, those won’t be the only considerations dri...

Read more
  • AWS
  • Azure
  • Cloud Migration
Joe Nemer
Joe Nemer
— September 12, 2019

Real-Time Application Monitoring with Amazon Kinesis

Amazon Kinesis is a real-time data streaming service that makes it easy to collect, process, and analyze data so you can get quick insights and react as fast as possible to new information.  With Amazon Kinesis you can ingest real-time data such as application logs, website clickstre...

Read more
  • amazon kinesis
  • AWS
  • Stream Analytics
  • Streaming data
Joe Nemer
Joe Nemer
— September 6, 2019

Google Cloud Functions vs. AWS Lambda: The Fight for Serverless Cloud Domination

Serverless computing: What is it and why is it important? A quick background The general concept of serverless computing was introduced to the market by Amazon Web Services (AWS) around 2014 with the release of AWS Lambda. As we know, cloud computing has made it possible for users to ...

Read more
  • AWS
  • Azure
  • Google Cloud Platform
Joe Nemer
Joe Nemer
— September 3, 2019

Google Vision vs. Amazon Rekognition: A Vendor-Neutral Comparison

Google Cloud Vision and Amazon Rekognition offer a broad spectrum of solutions, some of which are comparable in terms of functional details, quality, performance, and costs. This post is a fact-based comparative analysis on Google Vision vs. Amazon Rekognition and will focus on the tech...

Read more
  • Amazon Rekognition
  • AWS
  • Google Cloud Platform
  • Google Vision
Alisha Reyes
Alisha Reyes
— August 30, 2019

New on Cloud Academy: CISSP, AWS, Azure, & DevOps Labs, Python for Beginners, and more…

As Hurricane Dorian intensifies, it looks like Floridians across the entire state might have to hunker down for another big one. If you've gone through a hurricane, you know that preparing for one is no joke. You'll need a survival kit with plenty of water, flashlights, batteries, and n...

Read more
  • AWS
  • Azure
  • Google Cloud Platform
  • New content
  • Product Feature
  • Python programming
Joe Nemer
Joe Nemer
— August 27, 2019

Amazon Route 53: Why You Should Consider DNS Migration

What Amazon Route 53 brings to the DNS table Amazon Route 53 is a highly available and scalable Domain Name System (DNS) service offered by AWS. It is named by the TCP or UDP port 53, which is where DNS server requests are addressed. Like any DNS service, Route 53 handles domain regist...

Read more
  • Amazon
  • AWS
  • Cloud Migration
  • DNS
  • Route 53
Alisha Reyes
Alisha Reyes
— August 22, 2019

How to Unlock Complimentary Access to Cloud Academy

Are you looking to get trained or certified on AWS, Azure, Google Cloud Platform, DevOps, Cloud Security, Python, Java, or another technical skill? Then you'll want to mark your calendars for August 23, 2019. Starting Friday at 12:00 a.m. PDT (3:00 a.m. EDT), Cloud Academy is offering c...

Read more
  • AWS
  • Azure
  • cloud academy content
  • complimentary access
  • GCP
  • on the house
Avatar
Michael Sheehy
— August 19, 2019

What Exactly Is a Cloud Architect and How Do You Become One?

One of the buzzwords surrounding the cloud that I'm sure you've heard is "Cloud Architect." In this article, I will outline my understanding of what a cloud architect does and I'll analyze the skills and certifications necessary to become one. I will also list some of the types of jobs ...

Read more
  • AWS
  • Cloud Computing
Avatar
Nitheesh Poojary
— August 19, 2019

Boto: Using Python to Automate AWS Services

Boto allows you to write scripts to automate things like starting AWS EC2 instances Boto is a Python package that provides programmatic connectivity to Amazon Web Services (AWS). AWS offers a range of services for dynamically scaling servers including the core compute service, Elastic...

Read more
  • Automated AWS Services
  • AWS
  • Boto
  • Python
Avatar
Andrew Larkin
— August 13, 2019

Content Roadmap: AZ-500, ITIL 4, MS-100, Google Cloud Associate Engineer, and More

Last month, Cloud Academy joined forces with QA, the UK’s largest B2B skills provider, and it put us in an excellent position to solve a massive skills gap problem. As a result of this collaboration, you will see our training library grow with additions from QA’s massive catalog of 500+...

Read more
  • AWS
  • Azure
  • content roadmap
  • Google Cloud Platform
Avatar
Adam Hawkins
— August 9, 2019

DevSecOps: How to Secure DevOps Environments

Security has been a friction point when discussing DevOps. This stems from the assumption that DevOps teams move too fast to handle security concerns. This makes sense if Information Security (InfoSec) is separate from the DevOps value stream, or if development velocity exceeds the band...

Read more
  • AWS
  • cloud security
  • DevOps
  • DevSecOps
  • Security
Avatar
Stefano Giacone
— August 8, 2019

Test Your Cloud Knowledge on AWS, Azure, or Google Cloud Platform

Cloud skills are in demand | In today's digital era, employers are constantly seeking skilled professionals with working knowledge of AWS, Azure, and Google Cloud Platform. According to the 2019 Trends in Cloud Transformation report by 451 Research: Business and IT transformations re...

Read more
  • AWS
  • Cloud skills
  • Google Cloud
  • Microsoft Azure