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AWS Billing and Cost Management
User Guide (Version 2.0)

Understanding Consolidated Bills

Important

Consolidated billing is now a feature of AWS Organizations. The information provided in the Billing and Cost Management documentation might be out of date. For current information about consolidated billing, see Consolidated Billing and AWS Organizations in the AWS Organizations User Guide.

To ensure that you pay the lowest available prices for AWS products and services, AWS offers pricing tiers that reward higher usage with lower prices and discounted rates for purchasing in advance (Reserved Instances).

Pricing Tiers and Reserved Instances

AWS Billing and Cost Management includes two features designed to ensure that you pay the lowest available prices for AWS products and services:

  • Pricing tiers. Pricing tiers reward higher usage with lower unit prices for services.

  • Reserved Instances. Rates are discounted when you purchase some instances in advance for a specific period of time.

Pricing Tiers

Some AWS services are priced in tiers, which specify unit costs for defined amounts of AWS usage. As your usage increases, you cross thresholds into new pricing tiers that specify lower unit costs for additional usage in a month. Each AWS service publishes its pricing information independently. You can access all pricing pages from the AWS Service Pricing Overview page.

The AWS whitepaper How AWS Pricing Works also discusses usage scenarios and pricing options.

Your AWS usage is measured every month. To measure usage, AWS treats all accounts linked under consolidated billing–that is, each account family–as a single account. Linked accounts do not reach tier thresholds individually. Instead, all usage in the account family is aggregated for each service, which ensures faster access to lower-priced tiers. As each month begins, your service usage is reset to zero. For an example, see Calculating Blended Rates For Amazon S3 Standard Storage later in this topic.

Reserved Instances: Capacity Reservations

AWS also offers discounted hourly rates in exchange for an upfront fee and term contract. Services such as Amazon Elastic Compute Cloud (Amazon EC2) and Amazon Relational Database Service (Amazon RDS) use this approach to sell reserved capacity for hourly use of Reserved Instances. For more information, see Reserved Instances in the Amazon EC2 User Guide for Linux Instances and Working with Reserved DB Instances in the Amazon Relational Database Service Developer Guide.

When you reserve capacity with Reserved Instances, your hourly usage is calculated at a discounted rate for instances of the same usage type in the same Availability Zone. When you exceed the number of instances in your reservation and launch additional instances of the same instance type in the same Availability Zone, AWS averages the rates of the Reserved Instances and the On-Demand instances to give you a blended rate.

Blended Rates

Blended rates are the averaged rates of the Reserved Instances and On-Demand instances used by linked accounts. This section explains how AWS determines the blended rates for customers who use consolidated billing.

Note

Linked account consoles show a blended rate that is meant for display purposes only, and does not reflect the actual charges.

Here is how consolidated bills are calculated:

  1. A Reserved Instance is a capacity reservation. It is not a virtual machine. It is a commitment by a customer to pay in advance for specific Amazon EC2 or Amazon RDS instance capacity. In return, the customer gets a discounted rate over the cost of an On-Demand instance that is created or deleted in response to application load. From a technical perspective, there is no difference between a Reserved Instance and an On-Demand instance. When a customer launches an instance, AWS checks the account records for Reserved Instance purchases that can be applied to that instance.

  2. Consolidated Billing customers have multiple accounts that roll up into a single account that is designated as the payer account. This group of accounts is often called an account family. Owners of payer accounts see all usage incurred by the account family. This activity is aggregated to the payer account, and then allocated to the linked accounts that generated the charge in proportion to the linked account's usage. In other words, the linked account line items that you see in AWS Cost and Usage report and monthly billing (hourly) reports and on the Account Activity page are calculated recursively: The charges are calculated at the payer level and then allocated to linked accounts. Blended rates appear only on linked account line items.

    Note

    As a best practice, consider not running any AWS services under the account you designate as the payer account. This practices reduces confusion that can arise because payer account usage appears twice in the AWS Cost and Usage report and detailed billing reports. It appears once as an aggregated line item and again as an allocated line item.

  3. Estimated charges for all accounts are calculated several times each day. Because blended prices are an average for variable usage across an account family, they are dynamic, and vary with each set of calculations. If you look at each iteration of your daily reports, you will probably see different values each time in the Blended Rate column for your discount-eligible usage. Blended rates are finalized for the last AWS Cost and Usage report for the month, and for your AWS invoice. For more information about the AWS Cost and Usage report and monthly billing (hourly) reports, see Understanding Your Usage with Billing Reports.

Blended Rate Examples

This section contains examples of how blended rates are calculated for the following types of operations:

Calculating Blended Rates For Amazon S3 Standard Storage

Blended rates for Amazon S3 Standard Storage are calculated by taking the amount of data stored per month and dividing by the total cost of storage as the account becomes eligible for lower-cost tiers. For a hypothetical example, standard storage is available at the pricing tiers listed below:

Amazon S3 Pricing Tiers

Tier Description Price per GB
First 1 TB/month $0.10
Next 49 TB/month $0.08
Next 450 TB/month $0.06

The following table lists Amazon Simple Storage Service (Amazon S3) usage of type standard storage for a Consolidated Billing account family that includes a payer account and three linked accounts.

Example Standard Storage Usage Blended Cost

Account Tier Storage Amount Unblended Rate Unblended Cost Blended Cost Blended Rate
Payer First 1 TB / month 1 TB $0.10 $100
Next 49 TB / month 49 TB $0.08 $3920
Next 450 TB / month 45 TB $0.06 $2700
Linked 1 First 1 TB / month 1 TB $0.10 $100 70.737 0.070737
Next 49 TB / month 14 TB $0.08 $1120 990.318 0.070737
Next 450 TB / month 15 TB $0.06 $900 1061.055 0.070737
Linked 2 Next 49 TB / month 20 TB $0.08 $1600 1414.74 0.070737
Next 450 TB / month 15 TB $0.06 $900 1061.055 0.070737
Linked 3 Next 49 TB / month 15 TB $0.08 $1200 1061.055 0.070737
Next 450 TB / month 15 TB $0.06 $900 1061.055 0.070737

The costs in the preceding table are calculated as follows:

  1. All usage for the linked account family adds up to 95 TB (95,000 GB).

  2. The total cost is calculated by adding the cost of the first TB (1,000 GB x $0.10 = 100) to the cost of the next 49 TB (49,000 GB x $0.08 = $3920) and the cost of the remaining 45 TB (45,000 GB x $0.06 = $2700), for a total cost of $6720.

  3. The blended rate is calculated by dividing the total cost ($6720) by the amount of storage (95,000 GB), to produce a blended rate of $0.070737/GB.

  4. Last, the cost for each linked account is allocated by multiplying the blended rate by the total usage, resulting in the amounts listed in the Blended Cost column.

The example shows how using Consolidated Billing helps lower the overall monthly cost of storage. If you calculate the cost for each linked account separately, the total cost is $6780. By aggregating the usage of the three accounts, you reach the lower-priced tiers sooner. The most expensive storage, the first terabyte, is charged at the highest price just once, rather than three times. Three TB of storage at the most expensive rate of $0.10/GB results in charges of $300. Charging this storage as 1 TB ($100) and 2 additional TB at $0.08/GB ($16) results in a total charge of $260.

Calculating Blended Rates for Amazon EC2

Keep in mind that blended rates apply only to Consolidated Billing customers.

Calculation Process

Here's how AWS calculates blended rates for Amazon EC2 instances for Consolidated Billing account families:

  1. AWS aggregates usage for all accounts in the consolidated billing account family for the month or partial month and calculates costs based on unblended rates. Line items for these costs are created for the payer account. This bill computation model aims to apply the lowest unblended rates for which each line item is eligible. The allocation logic first applies free tier hours, then Reserved Instance hours, and then applies On-Demand rates to any remaining usage. In the AWS Cost and Usage report and monthly reports, you can see line items for these aggregated costs; the detailed billing (hourly) report does not distinguish between payer and linked accounts.

  2. AWS identifies each Amazon EC2 usage type in each region and allocates cost from the aggregated payer costs to the corresponding linked account line items for identical usage types in the same region. In the AWS Cost and Usage report and detailed billing reports, you can see which rate is applied for each line item in the Unblended Rate column.

    Note

    When AWS assigns Reserved Instance hours to linked accounts, it always starts first with the linked account that purchased the reservation, which is sometimes called Reserved Instance affinity. If there are hours from the capacity reservation left over, they are applied to other accounts operating identical usage types in the same Availability Zone. Again, this allocation always occurs using unblended rates.

  3. Last, AWS calculates an average cost for all identical usage, which can include both On-Demand and Reserved Instance rates, in the Availability Zone and lists the result in each line item in the Blended Rate column of the AWS Cost and Usage report and detailed billing (hourly) reports. The calculation of this average can result in lines where the unblended cost for the hour is $0.00, but the Blended Rate indicates an allocated cost. In such cases, the Unblended Cost column represents what you actually paid for that specific line item of usage.

Blended Rate Example

The example in this section shows how the Consolidated Billing logic aggregates cost to payer accounts and then allocates it to the linked accounts based on proportional usage. For this example, all usage is of the same usage type, occurs in the same Availability Zone, and is for the same Reserved Instance term. This example covers Full Upfront and Partial Upfront Reserved Instances.

The following table shows line items that represent the calculation of line items for Amazon EC2 usage for a 720-hour (30-day) month. Each instance is of the same usage type (t2.small) running in the same Availability Zone. This Consolidated Billing account family has purchased three Reserved Instances for a 1-year term. Linked Account 1 has three Reserved Instances; Linked Account 2 has no Reserved Instances, but uses some of the reserved hours from Linked Account 1.

In this example, Linked Account 1 has experienced fluctuations in application load that have produced both a 340-hour under-utilization of Reserved Instance resources and a need for 50 additional hours of On-Demand usage.

The data in the preceding table presents the following information:

  • The Consolidated Billing family has purchased 1,440 hours of capacity at a Full Upfront rate (two EC2 instances).

  • The Consolidated Billing family has purchased 720 hours of capacity at a Partial Upfront rate (one EC2 instance).

  • Linked Account 1 has purchased two Full Upfront Reserved Instances and one Partial Upfront Reserved Instance, and has used 1,820 hours of the reservation. Due to fluctuations in application load, 340 reserved instance hours remain, which can be applied to other eligible usage in the account family. In addition, application load when all three Reserved Instances were already running has necessitated an additional 50 hours of On-Demand usage.

  • Linked Account 2 has not purchased a Reserved Instance. This account needed 590 hours of On-Demand hours to meet application load requirements.

  • 340 hours of unused Reserved Instance time from Linked Account 1 was applied to Linked Account 2's 590 hours of On-Demand use. This reduced Linked Account 2's On-Demand hours to 250 hours.

  • Actual usage of Reserved Instance hours totals 2,160 hours.

  • Actual usage of On-Demand hours totals 250 hours.

  • Aggregate usage at the payer level incurs $12.18 of charges. After dividing this amount by the total hours of usage (2460) a blended rate of $0.00495122 per hour is obtained.

  • Using the total blended cost at the payer level, blended costs are then allocated to line items for the linked accounts.

  • Aggregating the blended costs results in a total of $12.18.

  • (Not included) Sometimes a blended rate requires a line item to account for a rounding error of $0.01.

You can check that your AWS Cost and Usage report, monthly, or detailed billing report is balanced by ensuring that the sum of the blended costs of each linked account line item and the rounding error line item equals the total of all payer account line items.

Note

Using an Excel spreadsheet to read the AWS Cost and Usage report or detailed billing (hourly) report, you can find the linked account line items to balance against payer line items by filtering on the following columns in the specified order:

  1. Product Name

  2. Usage Type

  3. Operation