AW S A c a d e m y C l o u d F o u n d a t i o n s

Module 2: Cloud Economics and Billing

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Module overview

Topics Activities
• Fundamentals of pricing • AWS Pricing Calculator
• Total Cost of Ownership • Support plans scavenger hunt
• AWS Organizations
• AWS Billing and Cost Management
• Technical Support

Demo
• Overview of the Billing Dashboard

Knowledge check
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Module objectives

After completing this module, you should be able to:

• Explain the AWS pricing philosophy
• Recognize fundamental pricing characteristics
• Indicate the elements of total cost of ownership
• Discuss the results of the AWS Pricing Calculator
• Identify how to set up an organizational structure that simplifies billing and
account visibility to review cost data.
• Identify the functionality in the AWS Billing Dashboard
• Describe how to use AWS Bills, AWS Cost Explorer, AWS Budgets, and AWS
Cost and Usage Reports
• Identify the various AWS technical support plans and features
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Module 2: Cloud Economics and Billing

Section 1: Fundamentals of pricing

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AWS pricing model
Three fundamental drivers of cost with AWS

Compute Storage Data transfer

• Charged per hour/second* • Charged typically per GB • Outbound is aggregated
and charged
• Varies by instance type
• Inbound has no charge
(with some exceptions)
*Linux only • Charged typically per GB

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How do you pay for AWS?

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Pay for what you use
Pay only for the services that you consume, with no large
upfront expenses.

On premises AWS

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 Pay less when you reserve

Invest in Reserved
Instances (RIs):
• Save up to 75 percent
• Options: EC2
• All Upfront Reserved instance
Instance (AURI) 
largest discount
• Partial Upfront
Reserved Instance NURI PURI AURI
(PURI)  lower
discounts
• No Upfront Payments
Reserved Instance
(NURI)  smaller
discount

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 Pay less by using more
Realize volume-based discounts:
• Savings as usage increases.
• Tiered pricing for services like Amazon
Simple Storage Service (Amazon S3),
Amazon Elastic Block Store (Amazon
EBS), or Amazon Elastic File System
(Amazon EFS)  the more you use, the
less you pay per GB.
• Multiple storage services deliver lower
storage costs based on needs.

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 Pay even less as AWS grows

As AWS grows:

• AWS focuses on lowering cost of doing business.

• This practice results in AWS passing savings from
economies of scale to you.
• Since 2006, AWS has lowered pricing 75 times (as of
September 2019).
• Future higher-performing resources replace current
resources for no extra charge.

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Custom pricing

• Meet varying needs through custom pricing.

• Available for high-volume projects with unique
requirements.

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AWS Free Tier

Enables you to gain free hands-on experience with the AWS

platform, products, and services. Free for 1 year for new customers.

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Services with no charge

Amazon VPC

Elastic Beanstalk**

Auto Scaling**

AWS CloudFormation**

AWS Identity and Access **Note: There might be

Management (IAM) charges associated with
other AWS services that are
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 • There is no charge for:
Key takeaways • Inbound data transfer.
• Data transfer between services
within the same AWS Region.
• Pay for what you use.
• Start and stop anytime.
• No long-term contracts are
required.
• Some services are free, but the
other AWS services that they
provision might not be free.

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Module 2: Cloud Economics and Billing

Section 2: Total Cost of Ownership

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On-premises versus cloud
Traditional Infrastructure AWS Cloud

≠
No upfront Improve time to
Equipment Resources and
expense—pay for market and agility
administration
what you use

Scale up Self-service
Contracts Cost and down infrastructure

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What is Total Cost of Ownership (TCO)?

Total Cost of Ownership (TCO) is the

financial estimate to help identify direct and
indirect costs of a system.

Why use TCO?

• To compare the costs of running an
entire infrastructure environment or
specific workload on-premises versus
on AWS
• To budget and build the business case
for moving to the cloud
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TCO considerations
Hardware: Server, rack chassis Facilities cost
Software: Operating system
power distribution units (PDUs),
1 Server Costs top-of-rack (TOR) switches
(OS), virtualization licenses
(and maintenance) Space Power Cooling
(and maintenance)

Hardware: Storage disks, Facilities cost

2 Storage Costs storage area network (SAN) or Storage administration costs
Fibre Channel (FC) switches Space Power Cooling

Network hardware: Local area Facilities cost

3 Network Costs network (LAN) switches, load Network administration costs
balancer bandwidth costs Space Power Cooling

4 IT Labor Costs Server administration costs

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On-premises versus all-in-cloud
You could save up to 96 percent a year by moving your infrastructure to AWS.
Your 3-year total savings would be $159,913.
Server Storage Network IT-Labor Total
400000

350000

300000

250000

200000

150000

100000

50000
AWS cost includes business-level support and 0
a 3-year PURI EC2 instance On-Premises AWS
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 AWS Pricing Calculator

Use the AWS Pricing Calculator to:

• Estimate monthly costs
• Identify opportunities to reduce
monthly costs
• Model your solutions before building
them
• Explore price points and calculations
behind your estimate
• Find the available instance types and Access the AWS Pricing Calculator
contract terms that meet your needs
• Name your estimate and create and
name groups of services
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Reading an estimate
Your estimate is broken into: first 12 months total, total upfront, and total monthly.

First 12 months total Total upfront Total monthly

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[Link]

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[Link]

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Activity: AWS Pricing Calculator activity

• Break up into groups of four or five and use the AWS Pricing Calculator and
specifications provided to develop a cost estimate.
• Be prepared to report your findings back to the class.

AWS Pricing calculator website

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Additional benefit considerations

Hard benefits Soft Benefits

• Reduced spending on compute, • Reuse of service and
storage, networking, security applications that enable you to
define (and redefine solutions)
• Reductions in hardware and by using the same cloud service
software purchases (capex)
• Increased developer productivity
• Reductions in operational costs,
backup, and disaster recovery • Improved customer satisfaction
• Reduction in operations personnel • Agile business processes that
can quickly respond to new and
emerging opportunities
• Increase in global reach

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Case study: Total Cost Of Ownership
Background: • Growing global company with over 200 locations
• 500 million customers, $3 billion annual revenue

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Case study: Total Cost of Ownership
Background: • Growing global company with over 200 locations
• 500 million customers, $3 billion annual revenue

Challenge: • Meet demand to rapidly deploy new solutions

• Constantly upgrade aging equipment

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Case study: Total Cost of Ownership
Background: • Growing global company with over 200 locations
• 500 million customers, $3 billion annual revenue

Challenge: • Meet demand to rapidly deploy new solutions

• Constantly upgrade aging equipment

Criteria: • Broad solution to handle all workloads

• Ability to modify processes to improve efficiency and lower costs
• Eliminate busy work (such as patching software)
• Achieve a positive return on investment (ROI)

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Case study: Total Cost of Ownership
Background: • Is a growing global company with over 200 locations
• Have 500 million customers, $3 billion (USD) annual revenue

Challenge: • Meet demand to rapidly deploy new solutions

• Constantly upgrade aging equipment

Criteria: • Have a broad solution to handle all workloads

• Be able to modify processes to improve efficiency and lower costs
• Eliminate busy work (such as patching software)
• Achieve a positive return on investment (ROI)

Solution: • Moved their on-premises data center to AWS

• Eliminated 205 servers (90 percent)
• Moved nearly all applications to AWS
• Used 3-year Amazon EC2 Reserved Instances
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Case study: Total Cost of Ownership

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Case study: Total Cost of Ownership

Business Goals:
Growth
Enhanced 24/7 business
Results: Operational efficiency

Resource Speed to market Operational

optimization • One day to provision efficiency
new businesses
• Robust security • Continuous cost
compliance • Just minutes to push out optimization and
a service reduction
• Enhanced disaster
recovery
• Increased computing
capacity
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Module 2: Cloud Economics and Billing

Section 3: AWS Organizations

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Introduction to AWS Organizations

AWS Organizations

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AWS Organizations terminology

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights *Organizational Units (OUs)
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Key features and benefits

Policy-based account
management

Group based account management

Application programming interfaces

AWS (APIs) that automate account
Organizations management

Consolidated billing
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Security with AWS Organizations

Service control
Control access with
IAM policies enable policies (SCPs) enable
AWS Identity and
you to allow or deny you to allow or deny
Access
access to AWS access to AWS
Management
services for users, services for individuals
(IAM).
groups, and roles. or group accounts in
an organizational unit
(OU).
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Organizations setup

Step 1 Step 2 Step 3 Step 4

Create Create Create Test
Organization organizational service restrictions
units control
policies

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Limits of AWS Organizations

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Accessing AWS Organizations

AWS Management Console

AWS Command Line

Interface (AWS CLI) tools
Software development kits
AWS (SDKs)
Organizations
HTTPS Query application
programming interfaces
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Module 2: Cloud Economics and Billing

Section 4: AWS Billing and Cost Management

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Introducing AWS Billing and Cost
Management

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AWS Billing Dashboard

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Tools

AWS Budgets AWS Cost and Usage Report AWS Cost Explorer

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Monthly bills

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Cost Explorer

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Forecast and track costs

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Cost and usage reporting

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Recorded demo:
Amazon Billing
dashboard
Amazon Billing
dashboard demo

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Billing dashboard demonstration

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Module 2: Cloud Economics and Billing

Section 5: Technical support

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AWS support

• Provide unique combination of tools and expertise:

• AWS Support
• AWS Support Plans
• Support is provided for:
• Experimenting with AWS
• Production use of AWS
• Business-critical use of AWS

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AWS support

• Proactive guidance :
• Technical Account Manager
(TAM)
• Best practices :
• AWS Trusted Advisor
• Account assistance :
• AWS Support Concierge

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 Support plans

AWS Support offers four support plans:

• Basic Support – Resource Center access,
Service Health Dashboard, product FAQs,
discussion forums, and support for health
checks
• Developer Support: Support for early
development on AWS
• Business Support: Customers that run
production workloads
• Enterprise Support: Customers that run
business and mission-critical workloads
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Case severity and response times

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Activity: Support plan scavenger hunt

• Break up into groups of four or five and develop a recommendation

for the best support plan for one of the business cases that are
provided.

• Be prepared to report your findings back to the class.

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Module 2: Cloud Economics and Billing

Module wrap-up

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Module summary

• Explored the fundamental of AWS pricing

• Reviewed TCO concepts
• Reviewed an AWS Pricing Calculator estimate
• Reviewed the Billing dashboard
• Reviewed Technical Support options and costs

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Complete the knowledge check

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Sample exam question

Which AWS service provides infrastructure security optimization

recommendations?
A. AWS Price List Application Programming Interface (API)
B. Reserved Instances
C. AWS Trusted Advisor
D. Amazon Elastic Compute Cloud (Amazon EC2) Spot Fleet

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Additional resources

• AWS Economics Center: [Link]

• AWS Pricing Calculator: [Link]
• Case studies and research: [Link]
• Additional pricing exercises: [Link]

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Thank you

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