9 Cloud Cost Optimization Best Practices

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In recent years, the cloud has become a primary option for IT departments, with many companies moving to public cloud offerings due to their lower operating costs, scalability, and elasticity. Public clouds are typically much more cost-effective than traditional options, but that can create an overspend when there’s no budget for growth or spikes in demand. 

In addition, it’s common for businesses to migrate from one public cloud provider to another as they look for better deals or move workloads from one data center location to another. 

The best way to manage cloud costs over time is to look for ways to optimize costs without sacrificing speed or capability. A careful examination of your use case can help you define optimization opportunities in terms of value rather than cost per se.

Also see: Cloud is Down: Protecting Your Organization against Outages

What Is Cloud Cost Optimization?

Cloud cost optimization is a method used to ensure you are being charged only for what you use. It is a series of strategies and techniques used to ensure that enterprise cloud services costs stay optimal. Cloud service providers typically have price breaks and special offers at different scale levels. 

Optimizing your cloud spend means taking advantage of these offers. You’ll need to know how much you’re spending in total, how much per use, what it costs for additional resources (like storage or computing power), and any discounts available for those resources. 

Benefits of Cloud Cost Optimization

Cloud cost optimization provides real-time visibility into cloud spending, lets you adjust your spending as needed and reduce data center costs. The ability to consolidate workloads in a single location means fewer resources are required, resulting in lower capital expenses. 

An optimized cloud environment meets your organization’s needs while staying within budget. Furthermore, it results in enhanced IT performance, improved business agility and accelerated application deployment. In light of these benefits, cloud cost optimization is quickly becoming a must-have strategy for organizations looking to lower their IT costs.

9 Cloud Cost Optimization Best Practices

An increase in cloud services has caused companies to spend a more significant percentage of their IT budgets on cloud computing. As a result, businesses invest more time and money in managing these services, some of which are underutilized. Companies that don’t deploy their cloud usage properly can waste millions of dollars each year. To prevent wasted costs and manage cloud usage effectively, follow these best practices for cloud cost optimization.

Also see: 9 Ways AI Can Help Improve Cloud Management

1) Identify Unused Resources

First, you should determine which assets are currently not being used. Examine your documentation to determine what resources have been commissioned and what resources have been effectively de-commissioned or moved to another cloud region. This will give you a good idea of how much capacity is available in your existing cloud environment. 

For example, if a specific server has been idling for several days in a row, it might be worth decommissioning it. If you see an increase in network traffic to a particular region, there is an opportunity to move additional workloads into that region at no extra cost. The goal is to make sure that all of your deployed resources are actively doing work and contributing value to your business.

2) Regularly Audit Your Cloud Costs

If you’re trying to scale your business and run at a high-efficiency level, it’s important to audit your cloud costs regularly. To do so, you need a solid understanding of where these costs are coming from (e.g., data storage, compute) and how much they are. 

If you’re not monitoring your cloud costs, you’re leaving money on the table. Make sure to audit your usage and figure out ways to optimize regularly. Try applying reserved instances for infrastructure-as-service (IaaS) offerings and think about allocating funds based on workloads instead of time periods. Also, if you have access to consolidated billing, take advantage of it. 

Also see: Developing a Cloud Modernization Strategy

3) Centralize Billing

When spending hundreds or thousands of dollars each month on cloud computing, it’s important to track exactly what you’re paying for and where you’re spending your money.  It can be challenging to track your spending in a multi-account environment, but centralized billing can help simplify that process. 

Consolidate and centralize your billing to find savings. For example, if you use AWS EC2 instances in multiple regions, consolidate them into a single account to consolidate all charges into one bill. Similarly, if you have several different AWS accounts for various projects, consolidate them into one account to consolidate all charges into one bill. By consolidating your billing, you can more easily identify cost-saving opportunities across your cloud spending.

4) Right-Size Computing Services

When cloud services are inefficiently sized, they won’t perform as well. This can lead to an overall increase in computing costs if you purchase more extensive services than your company needs. Before implementing a new cloud service, it’s best to review your current use of all cloud services to have a realistic baseline for computing needs. Once implemented, you should monitor performance and look for opportunities to adjust your usage to avoid overpaying for unnecessary resources. If a certain amount of memory or storage is too much for your workload, downgrade your plan rather than pay more for something you don’t need.

5) Leverage Heat Maps

Heat maps are an excellent way to identify areas of unused resources, a common problem in cloud environments. Heat maps can be used to determine which servers have high processor loads, memory issues or storage challenges. If left unchecked, these problems can become widespread and reduce your cloud performance down to a crawl. 

A heat map allows you to quickly identify problem servers and prevent server sprawl as a result of cloud cost optimization. 

6) Utilize Cloud Cost Optimization Tools

Several tools can help you track, analyze, and optimize your cloud costs. Cloud cost optimization tools can help enterprise drive down cost with simple workload migration and provide detailed spending data that leads to better visibility into expenses. With cloud cost optimization tools, cost management teams can quickly review spending and optimize budgets daily or hourly.

7) Monitor and Correct Cost Anomalies

Since cloud-based systems are run on complex software and hardware infrastructures, cost fluctuation is expected. However, costs can run too high if you’re not tracking these anomalies and making corrections. Be sure to monitor your spending on an ongoing basis to make adjustments before it becomes an issue. 

For example, if there’s a significant increase in your cloud bill, investigate what could be causing it. Perhaps you need to adjust your backup settings or upgrade to more robust storage solutions. If you don’t notice any changes or improvements after taking action, contact your provider immediately—you may have a billing error.

8) Consider Multi-Cloud vs. Single-Cloud Solution

A multi-cloud strategy involves accessing and utilizing several different cloud providers, not just one. A multi-cloud strategy assumes that organizations can save money by obtaining resources from multiple providers. 

However, when compared to a single cloud solution that accesses and utilizes a single provider for all its cloud needs, an enterprise using multiple clouds will pay more over time than one with a single-cloud solution. When you subscribe to a single cloud, you get discounts on data storage and disaster recovery services because you’re committing to buying those services in bulk.

Also see: Top Cloud Jobs in 2022

9) Leverage Reserved Instances

While cloud pricing is incredibly complex, there’s one straightforward way to save money when using reserved instances. Reserved instances allow you to buy your servers upfront at a discounted rate and lock in your price. You can even save as much as 75 percent off standard prices in some cases.


Suppose you’re not prepared to implement effective cloud cost management practices. In that case, one of two things will happen—your business’s cloud costs will get out of control and strain your budget, or you’ll suffer from an unsatisfactory performance that affects your bottom line. 

While there are numerous cost optimization tactics, in general it’s best to set realistic expectations, understand how certain services work within your overall business strategy and choose tools that have proven track records. The right combination of strategies can help you optimize cloud costs while maintaining high-quality service levels.

Aminu Abdullahi
Aminu Abdullahi
Aminu Abdullahi is an experienced B2B technology and finance writer and award-winning public speaker. He is the co-author of the e-book, The Ultimate Creativity Playbook, and has written for various publications, including eWEEK, Enterprise Networking Planet, Tech Republic, eSecurity Planet, CIO Insight, Enterprise Storage Forum, IT Business Edge, Webopedia, Software Pundit, and Geekflare.

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