Total Cost of Ownership
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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.


Welcome to this section about TCO or Total Cost of Ownership. TCO was already mentioned a few times. TCO stands for Total cost of ownership and is a comprehensive assessment of IT's total costs or other costs over time.

For IT, TCO includes hardware and software acquisition, management and support, communications, end-user expenses, and the opportunity cost of downtime, training, and other productivity losses.

Comparing the TCO of different environments is not an easy task. Especially in the "old world," the on-premise world, many factors play a role in this assessment, as this overview shows.

Let's take the facility costs for example. Something like space, power, cooling. It's nothing you have to worry about when using AWS resources. 

Using the cloud has greatly simplified the TCO assessment.

Because most additional costs are included in AWS's service prices, there are far fewer factors to take into account.

As someone who started his IT career by assembling servers and configuring switches, I can assure you that physical IT operation involves a lot of effort, costs, and stress.

Today, an EC2 instance can be started with just a few clicks; in the past, a server had to be assembled, installed, mounted in the data center, and wired. Also, there were costs for maintenance, cooling, space, power, licenses, and other factors.

Understanding TCO improves the overview on the business and helps you recognize issues and opportunities at an early stage.


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.