8 Cloud Cost Optimization Strategies That Anyone Can Use

Jason Yaeger
December 6, 2022
5 min read
Want to get a handle on your cloud spending? Put these cloud cost optimization strategies to use.

Cloud cost optimization helps you lower your overall cloud spending by detecting mismanaged resources, minimizing waste, conserving capacity for higher discounts, and right-sizing computing services to scale..

In this article, we'll discuss cloud cost optimization strategies that anyone can use to reduce overall cloud spending.

So without further ado, let's dive right in.

What is Cloud Cost Optimization?

Cloud cost optimization can be defined as:

Finding ways to run applications on the cloud, executing tasks or adding value to the business at the lowest feasible cost, and utilizing cloud providers as economically as possible.

Cloud cost optimization should be part of overall optimization efforts inside a business. Some other examples of business optimization are simple business management and advanced scientific and engineering disciplines. These include operations research, decision science, analytics, modeling, and forecasting, as a few examples.

Cloud cost optimization (CCO) lets you execute cloud-native apps cost-efficiently without affecting your service's health. Your service can employ cloud resources effectively while delivering more value, since it consists of a well-organized plan that's backed by good strategies and optimization tools like Tenacity.

Optimization ensures cost-effective and sufficient computing resources for each program or workload. It balances security, compliance, cost, and performance to ensure your cloud investments meet your organization's demands.

Here are 8 strategies to optimize Cloud costs:

Strategy 1: Review Your Cloud Bill

Cloud billing from cloud vendors and service providers gives specific details on cost, and the roadmap to cost-efficient cloud usage is a high-level breakdown of these expenditures. Compute, cloud storage, and value-added cloud services like RDS often pose the largest spending and give the highest possibility for realizing cost savings.

To start, set the most costly service as a priority and do a thorough examination. For example, cloud computing usually poses the greatest expenditure, and therefore possibility for savings.

At a high level, you should thoroughly understand the costs associated with every service the cloud vendor provides. This enables more informed decisions to be made about what should be purchased, what should be avoided, and what could be optimized.

Strategy 2: Track Costs and Look for Irregularities

There are a few main things to watch for in your cloud bills.

Most importantly, look closely and continually monitor for any sudden unexpected spikes and band spending. Even if it is typical to observe slight variations in cloud usage owing to seasonality, which is pretty common in cloud usage, these costs can add up. Further automating cost anomaly tracking allows you to respond to cost difficulties before they exceed your budget.

Strategy 3: Spot Idle Resources

After irregular usage, the management of idle resources is the next stage in cloud cost management. CPU utilization levels for idle compute instances typically range from 1% to 5% and are a big waste when an organization is charged for 100% of that computing instance.

Finding unused resources and consolidating computing tasks into fewer instances can be a crucial cloud cost savings method. While administrators in the early days of data centers frequently wanted to run at low utilization to have capacity for a spike in traffic or a busy season, this often led to waste. This is why many companies prefer the cloud's autoscaling, load balancing, and on-demand features. The downside is that you must administer your own servers to find cost savings.

Strategy 4: Get Rid of Old EBS Snapshots

Your EBS (electronic billing system) volumes can be manually or automatically snapshotted with AWS (Amazon Web Services). These snapshots can be kept in Amazon S3 and reimplemented on another disk in different geographical locations.

Taking proactive EBS snapshots as part of disaster recovery planning is one of the recommended practices in any reliable cloud operating model.

However, doing so means you need to keep an eye on the buildup of unneeded snapshots, which will drive up S3 storage prices. Deleting idle snapshots after a certain amount of time will help with your costs.

Strategy 5: Implement Cloud Cost Allocation

Cloud cost optimization enables businesses to predict spending and execute business KPIs. Organizations can better manage computing resources and have a clearer sense of IT costs in the next year thanks to this anticipated data.

Cloud-optimized businesses can then use this information to allocate budgets for cloud automation or other IT services.

Your internal teams can make better business decisions with the support of cloud cost optimization solutions, like identifying spending patterns and costs, implementing future budgets, and eliminating overspending.

Strategy 6: Establish Internal Processes

The cloud infrastructure and apps used by the majority of businesses are stale or unutilized, which lowers their cost-efficiency. This is why smart organizations optimize and remove extra capacity across cloud platforms to find cost-reductions.

Increased awareness of your company's cloud environment will also help you increase productivity and develop a more effective system. In addition, businesses can design a structure that more effectively manages costs by using a 3rd party cloud cost optimization solution, like Tenacity.

Just as utilizing cloud providers eliminates the need to spend time or money developing totally new systems, cloud cost optimization enables businesses to make quick adjustments while funding initiatives that enhance their IT infrastructure in the long run.

By utilizing adaptable, efficient cloud technology, cloud cost optimization solutions enable businesses to monitor and maintain the stability of their systems. Making these a part of your internal processes produces outsized benefits like cost savings that fund new initiatives.

Strategy 7: Reserved Compute and Spot Instances

Another common CCO strategy is using compute and spot instances.

Prepaid compute instances, known as reserved instances (RIs), provide significant price reductions. You choose an instance type, often a region or availability zone, and commit to utilizing the instance for a duration of 1 or 3 years when you buy RIs from a cloud provider.

Spot Instances, in contrast to Reserved Instances, are open to last-minute purchases. AWS sells off its unused resources at bargain prices. However, because they aren't always accessible and can sell out rapidly, these situations are unreliable. Spot Instances are helpful for batch processes or processes you can end immediately but not for crucial, time-consuming processes.

Using these at different times can significantly reduce your ongoing costs, albeit with a bit of increased risk.

Strategy 8: Cloud Native Design

A final way to achieve cost optimization of your cloud services is through building natively for the cloud.

Most businesses move their servers to the cloud through rehosting (lift-and-shift migration). The transition entails moving existing on-premises systems unchanged into a cloud environment. Rehosting is a quick and economical solution, but it can cause on-premises inefficiencies to move to the cloud, which can cause prices to skyrocket.

Building or rebuilding your apps and workload natively for the cloud can help you see significant cost reductions. Of course, if you lack the time, resources, or expertise to rework your legacy apps and mission-critical workloads, you can still make small design adjustments to eliminate any inefficiencies that might lead to increased resource utilization.


We introduced you to some of the cloud cost optimization best practices that would allow your company to limit cloud spending while increasing the value it receives from its current assets.

From reviewing your cloud billing to spotting idle resources, and from getting rid of old EBS snapshots and using Reserved and Spot instances, there are many strategies to achieving your goals.

Try Tenacity today, and start optimizing your cloud costs.

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