Key principles - How AWS Pricing Works

Key principles

Although pricing models vary across services, it’s worthwhile to review key principles and best practices that are broadly applicable.

Understand the fundamentals of pricing

There are three fundamental drivers of cost with AWS: compute, storage, and outbound data transfer. These characteristics vary somewhat, depending on the AWS product and pricing model you choose.

In most cases, there is no charge for inbound data transfer or for data transfer between other AWS services within the same Region. There are some exceptions, so be sure to verify data transfer rates before beginning. Outbound data transfer is aggregated across services and then charged at the outbound data transfer rate. This charge appears on the monthly statement as AWS Data Transfer Out. The more data you transfer, the less you pay per GB. For compute resources, you pay hourly from the time you launch a resource until the time you terminate it, unless you have made a reservation for which the cost is agreed upon beforehand. For data storage and transfer, you typically pay per GB.

Except as otherwise noted, AWS prices are exclusive of applicable taxes and duties, including VAT and sales tax. For customers with a Japanese billing address, use of AWS is subject to Japanese Consumption Tax. For more information, see Amazon Web Services Consumption Tax FAQ.

Start early with cost optimization

The cloud allows you to trade fixed expenses (such as data centers and physical servers) for variable expenses, and only pay for IT as you consume it. And, because of the economies of scale, the variable expenses are much lower than what you would pay to do it yourself. Whether you started in the cloud, or you are just starting your migration journey to the cloud, AWS has a set of solutions to help you manage and optimize your spend. This includes services, tools, and resources to organize and track cost and usage data, enhance control through consolidated billing and access permission, enable better planning through budgeting and forecasts, and further lower cost with resources and pricing optimizations. To learn how you can optimize and save costs today, visit AWS Cost Optimization.

Maximize the power of flexibility

AWS services are priced independently, transparently, and available on-demand, so you can choose and pay for exactly what you need. You may also choose to save money through a reservation model. By paying for services on an as-needed basis, you can redirect your focus to innovation and invention, reducing procurement complexity and enabling your business to be fully elastic.

One of the key advantages of cloud-based resources is that you don’t pay for them when they’re not running. By turning off instances you don’t use, you can reduce costs by 70 percent or more compared to using them 24/7. This enables you to be cost efficient and, at the same time, have all the power you need when workloads are active.

Use the right pricing model for the job

AWS offers several pricing models depending on product. These include:

  • On-Demand Instances let you pay for compute or database capacity by the hour or second (minimum of 60 seconds) depending on which instances you run with no long-term commitments or upfront payments.

  • Savings Plans are a flexible pricing model that offer low prices on Amazon EC2, AWS Lambda and AWS Fargate usage, in exchange for a commitment to a consistent amount of usage (measured in $/hour) for a one- or three-year term.

  • Spot Instances are an Amazon EC2 pricing mechanism that let you request spare computing capacity with no upfront commitment and at discounted hourly rate (up to 90% off the on-demand price).

  • Reservations provide you with the ability to receive a greater discount, up to 75 percent, by paying for capacity ahead of time. For more details, see the Optimizing costs with reservations section.