AWS Billing and Cost Management
User Guide (Version 2.0)

Understanding Consolidated Bills

If you manage an organization in AWS Organizations, you can use consolidated billing to view aggregated usage costs for accounts in the organization. Consolidated billing can also help you reduce those costs. For example, 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 instances in advance (known as reservations or Reserved Instances). Using consolidated billing, you can combine usage from multiple accounts into a single invoice, allowing you to reach the tiers with lower prices faster. You can also apply unused reservations from one account to another account's instance usage.

Calculating Consolidated Bills

In an organization, the master account is responsible for paying all charges that the member accounts incur. If you're an administrator of a master account and you have the appropriate permissions, you can view aggregated usage costs for Reserved Instance discounts and volume tiering for all member accounts. You can also view the charges that individual member accounts incur, because AWS creates a separate bill for each member account based on that account’s usage. AWS also includes invoice summaries for each account in the master account invoice. During each billing period, AWS calculates your estimated charges several times each day so that you can track your costs as your organization incurs them. Your bill is not finalized until the beginning of the next month.

Note

Like member accounts, a master account can incur usage charges. However, as a best practice you shouldn't use the master account to run AWS services. An exception is for services and resources that are required to manage the organization itself. For example, as part of managing your consolidated billing you might create an S3 bucket in the master account to store AWS Cost and Usage reports.

Pricing Tiers

Some AWS services are priced in tiers, which specify unit costs for defined amounts of AWS usage. As your usage increases, your usage crosses thresholds into new pricing tiers that specify lower unit costs for additional usage in a month. Your AWS usage is measured every month. To measure usage, AWS treats all accounts in an organization as a single account. Member accounts don't reach tier thresholds individually. Instead, all usage in the organization is aggregated for each service, which ensures faster access to lower-priced tiers. As each month begins, your service usage is reset to zero.

Each AWS service publishes its pricing information independently. You can access all individual pricing pages from the AWS Pricing page. The AWS whitepaper How AWS Pricing Works also discusses usage scenarios and pricing options.

Calculating Costs for Amazon S3 Standard Storage

The following table shows an example of pricing tiers (your costs might vary).

Amazon S3 Pricing Tiers

The following table shows Amazon S3 usage for an organization that includes a master account and three member accounts.

Example S3 Usage Blended Cost

The costs in the preceding table are calculated as follows:

  1. All usage for the organization adds up to 95 TB or 95,000 GB. This is rolled up into the master account for recording purposes. The master account has no usage of its own. Only the member accounts incur usage. Member 1 uses 1 TB of storage. This satisfies the first pricing tier for the organization. The second pricing tier is satisfied by all three member accounts (14 TB for member 1 + 20 TB for member 2 + 15 TB for member 3 = 49 TB). The third pricing tier is applied to any usage over 49 TB. In this example, the third pricing tier is applied to total member account usage of 45 TB.

  2. The total cost is calculated by adding the cost of the first TB (1,000 GB * $0.10 = 1 TB * $100.00 = $100.00) to the cost of the next 49 TB (49,000 GB * $0.08 = 49 TB * $80.00 = $3920.00) and the cost of the remaining 45 TB (45,000 GB * $0.06 = 45 TB * $60.00 = $2700.00), for a total of $6,720 ($100.00 + $3920.00 + $2700.00 = $6720.00).

The preceding example shows how using consolidated billing in AWS Organizations helps lower the overall monthly cost of storage. If you calculate the cost for each member account separately, the total cost is $6,780 rather than $6,720. By aggregating the usage of the three accounts, you reach the lower-priced tiers sooner. The most expensive storage, the first TB, is charged at the highest price just once, rather than three times. For example, three TB of storage at the most expensive rate of $100/TB would result in a charge of $300. Charging this storage as 1 TB ($100) and two additional TB at $80 ($160) results in a total charge of $260.

Reserved Instances

AWS also offers discounted hourly rates in exchange for an upfront fee and term contract.

Capacity Reservations

A Reserved Instance is a reservation that provides a discounted hourly rate 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. It is not a virtual machine. It is a commitment to pay in advance for specific Amazon EC2 or Amazon RDS instances. In return, you get a discounted rate as compared to On-Demand Instance usage. From a technical perspective, there is no difference between a Reserved Instance and an On-Demand Instance. When you launch an instance, AWS checks for qualifying usage across all accounts in an organization that can be applied to an active reservation. 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.

Regional Reserved Instances

Regional Reserved Instances don't reserve capacity. Instead, they provide Availability Zone flexibility and in certain cases instance size flexibility. Availability Zone flexibility allows you to run one or more instances in any Availability Zone in your reserved AWS Region. The Reserved Instance discount is applied to any usage in any Availability Zone. Instance size flexibility provides the Reserved Instance discount to instance usage regardless of size, within that instance family. Instance size flexibility applies to only regional Reserved Instances on the Linux/Unix platform with default tenancy. For more information about regional Reserved Instances, see Reserved Instances in this documentation and Applying Reserved Instances in the Amazon Elastic Compute Cloud User Guide for Linux Instances.

Calculating Costs for Amazon EC2 with Reserved Instances

AWS calculates blended rates for Amazon EC2 instances by aggregating all the EC2 usage for a specific instance type in a specific AWS Region for an organization. AWS applies all available discounts, calculates the cost tier for the organization, and then divides the organization's costs by the total amount of usage.

Calculation Process

AWS calculates blended rates for Amazon EC2 instances using the following logic:

  1. AWS aggregates usage for all accounts in an organization for the month or partial month, and calculates costs based on unblended rates such as rates for On-Demand and Reserved Instances. Line items for these costs are created for the master account. This bill computation model attempts to apply the lowest unblended rates that each line item is eligible for. The allocation logic first applies Reserved Instance hours, then free tier hours, and then On-Demand rates to any remaining usage. In the AWS Cost and Usage report, you can see line items for these aggregated costs.

  2. AWS identifies each Amazon EC2 usage type in each AWS Region and allocates cost from the aggregated master account to the corresponding member account line items for identical usage types in the same region. In the AWS Cost and Usage report, the Unblended Rate column shows that rate applied to each line item.

    Note

    When AWS assigns Reserved Instance hours to member accounts, it always starts with the account that purchased the reservation. If there are hours from the capacity reservation left over, AWS applies them to other accounts that operate identical usage types in the same Availability Zone.

    AWS allocates a regional RI by instance size: The RI is applied first to the smallest instance in the instance family, then to the next smallest, and so on. AWS applies an RI or a fraction of an RI based on the normalization factor of the instance. The order in which AWS applies RIs doesn't result in a price difference.

Blended Rates and Costs

Blended rates are the averaged rates of the Reserved Instances and On-Demand Instances that are used by member accounts in an organization in AWS Organizations. AWS calculates blended costs by multiplying the blended rate for each service with an account’s usage of that service.

Note

AWS shows each linked account thier charges as unblended costs. AWS continues to apply all of the consolidated billing benefits such as reservations and tiered prices across all linked accounts in an AWS Organizations organization.

This section includes examples that show how AWS calculates blended rates for the following services.

Calculating Blended Rates for Amazon S3 Standard Storage

AWS calculates blended rates for Amazon S3 standard storage by taking the total cost of storage and dividing by the amount of data stored per month. Using the example from Calculating Consolidated Bills where we calculated a cost of $6,720 for a master account and three member accounts, we calculate the blended rates for the accounts using the following logic:

  1. The blended rate in GB is calculated by dividing the total cost ($6,720) by the amount of storage (95,000 GB) to produce a blended rate of $0.070737/GB. The blended rate in TB is calculated by dividing the total cost ($6,720) by the amount of storage (95 TB) to produce a blended rate of $70.737/TB.

  2. The blended cost for each member account is allocated by multiplying the blended rate (for GB or TB) by the usage, resulting in the amounts listed in the Blended Cost column. For example, Member 1 uses 14,000 GB of storage priced at the blended rate of $0.070737 (or 14 TB priced at $70.737) for a blended cost of $990.318.

Calculating Blended Rates for Amazon EC2

The following example shows how the consolidated billing logic aggregates Amazon EC2 costs to the master account and then allocates it to the member 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. The organization has purchased three Reserved Instances for a one-year term. Member Account 1 has three Reserved Instances. Member Account 2 has no Reserved Instances, but uses an On-Demand Instance.

The data in the preceding table shows the following information:

  • The organization has purchased 1,440 hours of Reserved Instance capacity at a Full Upfront rate (two EC2 instances).

  • The organization has purchased 720 hours of Reserved Instance capacity at a Partial Upfront rate (one EC2 instance).

  • Member account 1 completely uses the two Full Upfront Reserved Instances and the one Partial Upfront Reserved Instance for a total usage of 2,160 hours. Member account 2 uses 300 hours of an On-Demand Instance. Total usage for the organization is 2,460 hours (2160 + 300 = 2,460).

  • The unblended rate for the three Reserved Instances is $0.00. The unblended cost of an RI is always $0.00 because RI charges are not included in blended rate calculations.

  • The unblended rate for the On-Demand Instance is $0.023. Unblended rates are associated with the current price of the product. They can't be verified from information in the preceding table.

  • The blended rate is calculated by dividing the total cost ($6.90) by the total amount of Amazon EC2 usage (2460 hours). This produces a rate of $0.002804878 dollars per hour.

You can check that your AWS Cost and Usage report is balanced by ensuring that the sum of the blended costs of each member account line item and the rounding error line item equals the total of all master account line items.

Note

You can download the AWS Cost and Usage report into a .csv file, and then use an Excel spreadsheet to find the member account line items to balance against master account line items in the report. To do that, filter on the following columns in the following order:

  1. Product Name

  2. Usage Type

  3. Operation