Save on AWS EC2 Costs: Optimize Billing for Vertical Accounts

Optimize AWS EC2 Costs for Vertical Accounts

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Question

A global software company is using Amazon EC2 Reserved and On-Demand Instance for all project-related work.

They have different accounts created for each vertical like Finance, Project, HR, which are managed individually by account owners in each vertical.

Management is looking for options to decrease these recurring charges.

How could the management save monthly billing charges without impacting the performance?[Choose TWO]

Answers

Explanations

Click on the arrows to vote for the correct answer

A. B. C. D.

Correct Answer - B and C.

Consolidated Billing combines usage from all the accounts & billing is generated based on the total usage.

Services like Amazon EC2, Amazon S3, etc.

have volume pricing tiers where the overall charges decrease with more usage volume.

Option A is incorrect.

However, this will save the cost but will impact the performance.

Spot Instance and On-demand Instance are very similar in nature.

The main difference between these is commitment.

In Spot Instance, there is no commitment.

As soon as the Bid price exceeds the Spot price, a user gets the Instance.

In an On-demand Instance, a user has to pay the On-demand rate specified by Amazon.

Once they have bought the Instance, they have to use it by paying that rate.

In Spot Instance, once the Spot price exceeds the Bid price, Amazon will shut the instance.

The benefit to users is that they will not be charged for the partial hour in which the Instance was taken back from them.

Spot instances are not always cheaper than on-demand.

They can and do sometimes fluctuate wildly, even to very high per hour amounts, higher than the on-demand price at times.

Option B is correct as Reserved Instance discounts can be applied to accounts in an organization, but Reserved Instance sharing has to be turned on or off for the account.

For details, please refer to the below URL-

https://aws.amazon.com/premiumsupport/knowledge-center/ec2-ri-consolidated-billing/

Option D is incorrect as the Budget will limit charges but will not provide discounts on services being used by various accounts.

For more information on using consolidated billing, refer to the following URLs-

https://docs.aws.amazon.com/awsaccountbilling/latest/aboutv2/consolidated-billing.html https://docs.aws.amazon.com/awsaccountbilling/latest/aboutv2/useconsolidatedbilling-discounts.html

Sure, I'd be happy to provide a detailed explanation!

The management of the global software company is looking for options to decrease their recurring charges without impacting the performance. In order to achieve this, there are a few different strategies that they can consider. Two of these strategies are:

  1. Each account should launch a Spot Instance instead of using On-Demand Instance.
  2. Each account should share Reserved Instance which they have purchased with other accounts.

Let's take a closer look at each of these options.

  1. Launching Spot Instances: Amazon EC2 Spot Instances are a cost-effective way to run applications in the cloud. Spot Instances are spare compute capacity that Amazon EC2 offers at discounted prices. The prices are determined by supply and demand, so they can fluctuate over time. Spot Instances can be interrupted by Amazon EC2 with two minutes of notification when the Spot price exceeds your bid price or when Amazon EC2 needs the capacity back.

If the software company is willing to accept the possibility of interruptions to their instances, then using Spot Instances can be a good way to save on their monthly billing charges. Each account can launch Spot Instances instead of using On-Demand Instances, which are typically more expensive. This can significantly reduce the cost of running applications in the cloud.

  1. Sharing Reserved Instances: Reserved Instances are a pricing model that enables customers to receive a significant discount on the hourly charge for instances that are reserved for a one- or three-year term. Reserved Instances are a good option for workloads that have predictable usage patterns.

If the software company has already purchased Reserved Instances, then they can save on monthly billing charges by sharing those Reserved Instances with other accounts. This can be done by using AWS Resource Access Manager (RAM) to share the Reserved Instances with other accounts. By doing this, each account can take advantage of the Reserved Instance discounts without having to purchase their own Reserved Instances.

In addition to these two strategies, there are a few other options that the software company can consider:

  1. Create an AWS organization and leverage consolidated billing feature to get the discounts on Amazon EC2. Consolidated billing allows companies to consolidate payment for multiple AWS accounts or multiple Amazon EC2 accounts within a single organization. By doing this, the company can take advantage of the volume discounts that are available for Amazon EC2.

  2. Use Budgets to limit the charges incurred for using Amazon EC2. AWS Budgets is a free service that allows customers to set custom cost and usage budgets that alert them when their AWS costs or usage exceed their budgeted amount. By using AWS Budgets, the company can monitor their usage of Amazon EC2 and ensure that they are not exceeding their budget.

In summary, the management of the global software company can save on monthly billing charges by using Spot Instances, sharing Reserved Instances, creating an AWS organization, and using AWS Budgets. By taking advantage of these cost-saving strategies, they can reduce their recurring charges without impacting the performance of their applications.