AWS Cost Savings Tips for AWS Usage – Part 3, Consolidated Billing
In the first part of this series of AWS cost savings, we presented 15 tips for optimizing your AWS costs, while the second part focused on the Reserved Instance concept. This time, we will talk how you can optimize your AWS cost by using consolidated billing.
Consolidated billing enables you to consolidate payment for multiple AWS accounts within your company by designating a single paying account. Consolidated billing enables you to see a combined view of AWS costs incurred by all accounts, as well as obtain a detailed cost report for each of the individual AWS accounts associated with your “Paying Account”.
Suppose your organization has multiple projects or departments using AWS, and each department or project has their own cost center. Though final payment is being made by your organization, you want to track how much AWS cost each cost center is incurring. If you have only one AWS account, it will not be possible to track usage by cost center because Amazon lists your total AWS usage and not per instance or per storage usage. AWS provides a facility whereby you can create an AWS account for each cost center, create a Master Payee account, and then link all the cost center accounts to your Master Payee account. This is achieved through the “Consolidated Billing” functionality.
Using IAM you can separate the functionality of each group, but again AWS does not currently provide usage per IAM user so it will still not be possible to track individual usage with IAM. Below are a few tips on how you can save some money using consolidated billing.
Top 5 things to look for when you are using consolidated billing
1 - If you have multiple AWS accounts, use consolidated billing. All accounts consolidated in the bill will be treated as a single account, and all usage will be combined to save some costs. For example, if one account does 4 GB of data transfer while other account does 8 GB of data transfer. AWS charges $0.17 per GB for the first 10 TB of data transfer out used, and $0.13 per GB for the next 40 TB used. So, in this case, AWS will charge $0.13 for 2 GB of data while $0.17 for 10 GB of data instead of separately charging for 4 and 8 GB at $0.17.
2 - All accounts on a Consolidated Bill can receive the hourly cost benefit of Amazon EC2 Reserved Instances purchased by any other account. So if you have two accounts running two instances of the same size in the same availability zone, they will get the benefit of reserved instance as mentioned above.
- So, as per above, if your total usage of both instances of two accounts is more than 2150 hours (i.e., around 6-7 weeks for each account) you should purchase a reserved instance.
- This is also applicable for RDS reserved instances provided that the RDS instances of both accounts have the same attributes, such as instance size, deployment type, license model, and DB engine.
3 - If you are using consolidated billing, you will not get the benefit of the AWS free usage tier. If you want to use the AWS free usage tier, use it before you add your account to consolidated billing.
4 - To give the paying account owner the lowest bill, any AWS credits the paying and linked accounts have are applied to the Consolidated Bill. For example, you have 5 accounts in consolidated billing. Each account has usage as $1000, $500, $1000, $500, $2000. If you apply a coupon worth $1000 to the third account ($1000). It will apply the coupon to each account proportionally per their usage. i.e. They will be discounted as follows:
|Account Name||Current Usage||Discount Applied|
Here total usage is $5000. The coupon is applied based on the usage of each account, i.e., for Account3, it will get discount of $(1000/5000) = 0.20%.
This discount varies throughout your monthly billing cycle. For example, after 10 days in the same billing cycle, if all accounts have usage as $2000, $500, $2500, $2000, $3000, they will be discounted as follows:
|Account Name||Current Usage||Discount Applied|
As shown above, because the monthly billing cycle is not complete yet, it will keep changing your discount amount as per usage and % of total usage.If a linked account is removed from a Consolidated Bill, any unused credits belonging to that account go with it.
5 - When an account is added to your consolidated billing, you will be responsible for its billing only from the moment it is added. Any usage in same billing cycle before its addition will be charged to the account owner.
About the Author
Cloud architect for more than 2 years with around 12 years of IT Experience. His area of focus is Amazon Cloud and I have written a couple of White papers using AWS. Responsible for designing or migrating HA, scalable application on Cloud. In his past worked as Consultant, Developer, Technical Leader, Project Leader and Account Manager with various global clients.
Keywords: Amazon web services, Amazon AWS console, Amazon AWS instances, EC2 Service, Amazon cloud computing, EC2 EBS, S3 storage, AWS cloud cost savings, Reserved instances utilization, Cloud cost efficient, EC2 CPU utilization, AWS Infrastructure elasticity, Amazon EC2 capacity, Cloud overspend, Consolidate billing