cost-optimization

Cloud Cost Optimization

Strategies and patterns for optimizing cloud costs across AWS, Azure, and GCP.

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Instructions

Purpose

Implement systematic cost optimization strategies to reduce cloud spending while maintaining performance and reliability.

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Cost Optimization Framework

1. Visibility

2. Right-Sizing

3. Pricing Models

4. Architecture Optimization

AWS Cost Optimization

Reserved Instances

Savings: 30-72% vs On-Demand
Term: 1 or 3 years
Payment: All/Partial/No upfront
Flexibility: Standard or Convertible

Savings Plans

Compute Savings Plans: 66% savings
EC2 Instance Savings Plans: 72% savings
Applies to: EC2, Fargate, Lambda
Flexible across: Instance families, regions, OS

Spot Instances

Savings: Up to 90% vs On-Demand
Best for: Batch jobs, CI/CD, stateless workloads
Risk: 2-minute interruption notice
Strategy: Mix with On-Demand for resilience

S3 Cost Optimization

resource "aws_s3_bucket_lifecycle_configuration" "example" {
  bucket = aws_s3_bucket.example.id
  rule {
    id     = "transition-to-ia"
    status = "Enabled"
    transition {
      days          = 30
      storage_class = "STANDARD_IA"
    }
    transition {
      days          = 90
      storage_class = "GLACIER"
    }
    expiration {
      days = 365
    }
  }
}

Azure Cost Optimization

Reserved VM Instances

Azure Hybrid Benefit

Azure Advisor Recommendations

GCP Cost Optimization

Committed Use Discounts

Sustained Use Discounts

Preemptible VMs

Tagging Strategy

AWS Tagging

locals {
  common_tags = {
    Environment = "production"
    Project     = "my-project"
    CostCenter  = "engineering"
    Owner       = "team@example.com"
    ManagedBy   = "terraform"
  }
}
resource "aws_instance" "example" {
  ami           = "ami-12345678"
  instance_type = "t3.medium"
  tags = merge(
    local.common_tags,
    {
      Name = "web-server"
    }
  )
}

Reference: See references/tagging-standards.md

Cost Monitoring

Budget Alerts

# AWS Budget
resource "aws_budgets_budget" "monthly" {
  name              = "monthly-budget"
  budget_type       = "COST"
  limit_amount      = "1000"
  limit_unit        = "USD"
  time_period_start = "2024-01-01_00:00"
  time_unit         = "MONTHLY"
  notification {
    comparison_operator        = "GREATER_THAN"
    threshold                  = 80
    threshold_type            = "PERCENTAGE"
    notification_type         = "ACTUAL"
    subscriber_email_addresses = ["team@example.com"]
  }
}

Cost Anomaly Detection

Architecture Patterns

Pattern 1: Serverless First

Pattern 2: Right-Sized Databases

Development: t3.small RDS
Staging: t3.large RDS
Production: r6g.2xlarge RDS with read replicas

Pattern 3: Multi-Tier Storage

Hot data: S3 Standard
Warm data: S3 Standard-IA (30 days)
Cold data: S3 Glacier (90 days)
Archive: S3 Deep Archive (365 days)

Pattern 4: Auto-Scaling

resource "aws_autoscaling_policy" "scale_up" {
  name                   = "scale-up"
  scaling_adjustment     = 2
  adjustment_type        = "ChangeInCapacity"
  cooldown              = 300
  autoscaling_group_name = aws_autoscaling_group.main.name
}
resource "aws_cloudwatch_metric_alarm" "cpu_high" {
  alarm_name          = "cpu-high"
  comparison_operator = "GreaterThanThreshold"
  evaluation_periods  = "2"
  metric_name         = "CPUUtilization"
  namespace           = "AWS/EC2"
  period              = "60"
  statistic           = "Average"
  threshold           = "80"
  alarm_actions       = [aws_autoscaling_policy.scale_up.arn]
}

Cost Optimization Checklist

Tools

Reference Files

Related Skills