Module 2: Cloud Economics and Billing

AWS Academy Cloud Foundations

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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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Section 1: Fundamentals of
pricing
Module 2: Cloud Economics and Billing

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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 NURI PURI AURI
Reserved Instance
(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
used with these services.
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Key takeaways • There is no charge (with some exceptions)
for:
• 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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Section 2: Total Cost of Ownership
Module 2: Cloud Economics and Billing

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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
contract terms that meet your needs
Access the AWS Pricing Calculator
• 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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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 applications
storage, networking, security that enable you to define (and
redefine solutions) by using the
• Reductions in hardware and same cloud service
software purchases (capex) • Increased developer productivity
• Reductions in operational costs, • Improved customer satisfaction
backup, and disaster recovery
• Agile business processes that can
• Reduction in operations personnel quickly respond to new and
emerging opportunities
• Increase in global reach

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Case study: Total Cost Of Ownership (1 of 6)

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 (2 of 6)

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 (3 of 6)

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 (4 of 6)

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 (5 of 6)

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Case study: Total Cost of Ownership (6 of 6)

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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Section 3: AWS Organizations
Module 2: Cloud Economics and Billing

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Introduction to AWS Organizations

AWS Organizations

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AWS Organizations terminology

*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
policies (SCPs)
with IAM policies enable
enable you to allow
AWS Identity and you to allow or deny
or deny access to
Access access to AWS
AWS services for
Management services for users,
individuals or group
(IAM). groups, and roles.
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
AWS kits (SDKs)
Organizations
HTTPS Query application
programming interfaces
(API)
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Section 4: AWS Billing and Cost
Management
Module 2: Cloud Economics and Billing

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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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Section 5: Technical support
Module 2: Cloud Economics and Billing

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AWS support (1 of 2)
• 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 (2 of 2)

• 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 wrap-up
Module 2: Cloud Economics and Billing

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