General AWS Terminology
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This course provides an introduction to cost management in AWS. It starts by looking at the economics of the cloud in general, including economies of scale and total cost of ownership, and you'll also learn why cost optimization is important.

We'll also cover the AWS Pricing Calculator and the AWS Well-Architected Framework and how these allow you to optimize your AWS environment and also calculate how much it will cost. We round off the course by taking a look at terminology across areas including software development, DevOps, finance, and general AWS terminology.

Learning Objectives

  • Get a foundational understanding of cost optimization in AWS
  • Learn the fundamentals of cloud economics including economies of scale, total cost of ownership, and why cost optimization is important
  • Learn about the AWS pricing calculator
  • Learn about the AWS Well-Architected Framework and how it can help to make your AWS environment more efficient and cost-effective
  • Understand a range of terminology linked to cost management in AWS

Intended Audience

This course is intended for cloud architects, business management, or anyone looking to manage their costs effectively in AWS.


To get the most out of this course, you should already have some experience with the AWS platform.


Account (AWS) - AWS services are housed within an Account. Accounts can be Master Payer accounts that contain billing data or Linked Accounts which do not. AWS Organizations and other services can be used to manage Accounts within AWS. Many AWS services can span Account boundaries.

RI -Reserved Instance - a commitment to use a cloud resource, usually of a specific type, location, and size, for some period of time, usually 1 or 3 years, in exchange for a discounted rate.

SP - Savings Plans are very similar to Reserved Instances but more flexible and can only be applied to compute usage.

AURI, PURI, NURI / SP (SavingsPlans)

All Upfront Reserved instance, Partial Upfront Reserved Instance and No Upfront Reserved Instance. Some people use these acronyms when referring to reserved instances, in case you hear them.

EC2 (AWS) Elastic Compute Cloud AWS' virtual computer cloud offering

AWS supports a variety of instance, Instance Type, Family, Generation, Size (AWS) - Instance refers to a specific EC2 virtual machine. Instance Families, designated by letter, an instance Generation designated by a number and optionally other letters, and instance sizes which follow a structure of nano, micro, small, medium, large, xlarge, 2xlarge, etc. The Instance type includes the entire ndesignation, such as m5a.4xlarge which would be an "m" family, 5th generation, "a" for AMD chipset, 4xlarge sized instance. 

IAM - Identity and Access Management - is the way that AWS refer to their system of granting and governing permissions within their cloud platforms.

Tags are metadata attached to a specific ressource running in AWS. They are meant to provide contextual information about the resource. Tags can be created with the resource in most cases or added after the fact manually or systematically. Tags are useful for identifying the type of resource, the environment it supports, the owner, the cost center, etc. 

Tags can be queried or accessed in a wide variety of ways and can be used to drive automation, divide costs, or for other important purposes. Most large cloud-using organizations will at some point establish governance policies around tag use and require specific tags be used on all resources.


Web-based portal from where you can manage your accounts or access AWS services. 

Convertible / Standard

AWS terms referring to the ability to convert reserved instances for some resources to different specifications. Standard RIs cannot be converted or changed for their entire term. Convertibility reduces the discount offered by AWS.


AWS has the concept of a Region, which is a physical location around the world where data centers are clustered. An AWS Region consists of multiple, isolated, and physically separate AZ's within a geographic area. Regions are generally guaranteed to be more than a minimum distance from one another to satisfy disaster recovery requirements.

Availability Zones (AZ) are sub-units of a Region, there are typically multiple AZs per Region. AZs are made up of multiple physical data centers but can generally be thought of as being very closely situated from a network latency and performance perspective.

About the Author

Oliver Gehrmann is a FinOps Consultant and CEO of kreuzwerker Frankfurt, a German consulting firm with a strong focus on AWS, software engineering, and cloud financial management. He's worked in IT for over 10 years, facilitating the migration from physical servers in data centers to modern cloud infrastructures.
He and his team have experienced first-hand that costs in the cloud are becoming more and more of a challenge when about 2.5 years ago more and more customers approached them with this topic. Costs ran out of control and could not be addressed to business values.
Since that time, we have worked extensively on the topic of cloud financial management and have already been able to save our customers many millions of dollars. He now shares this knowledge in order to help others.