Cloud Cost Management

Overview

Cloud cost management involves monitoring, analyzing, and optimizing cloud spending. Implement strategies using reserved instances, spot pricing, proper sizing, and cost allocation to maximize ROI and prevent budget overruns.

When to Use

• Reducing cloud infrastructure costs
• Optimizing compute spending
• Managing database costs
• Storage optimization
• Data transfer cost reduction
• Reserved capacity planning
• Chargeback and cost allocation
• Budget forecasting and alerts

Implementation Examples

1. AWS Cost Optimization with AWS CLI

# Enable Cost Explorer
aws ce get-cost-and-usage \
  --time-period Start=2024-01-01,End=2024-01-31 \
  --granularity MONTHLY \
  --metrics "UnblendedCost" \
  --group-by Type=DIMENSION,Key=SERVICE

# List EC2 instances for right-sizing
aws ec2 describe-instances \
  --query 'Reservations[*].Instances[*].[InstanceId,InstanceType,State.Name,LaunchTime,Tag]' \
  --output table

# Find unattached EBS volumes
aws ec2 describe-volumes \
  --filters Name=status,Values=available \
  --query 'Volumes[*].[VolumeId,Size,State,CreateTime]'

# Identify unattached Elastic IPs
aws ec2 describe-addresses \
  --query 'Addresses[?AssociationId==null]'

# Get RDS instance costs
aws rds describe-db-instances \
  --query 'DBInstances[*].[DBInstanceIdentifier,DBInstanceClass,StorageType,AllocatedStorage]'

# Create budget alert
aws budgets create-budget \
  --account-id 123456789012 \
  --budget BudgetName=MyBudget,BudgetLimit='{Amount=1000,Unit=USD}',TimeUnit=MONTHLY,BudgetType=COST \
  --notifications-with-subscribers \
    'Notification={NotificationType=ACTUAL,ComparisonOperator=GREATER_THAN,Threshold=80},Subscribers=[{SubscriptionType=EMAIL,[email protected]}]'

# List savings plans
aws savingsplans describe-savings-plans

# Get reserved instances
aws ec2 describe-reserved-instances \
  --query 'ReservedInstances[*].[ReservedInstancesId,InstanceType,State,OfferingType,Duration]'

2. Terraform Cost Management Configuration

# cost-management.tf
terraform {
  required_providers {
    aws = {
      source  = "hashicorp/aws"
      version = "~> 5.0"
    }
  }
}

provider "aws" {
  region = var.aws_region
}

variable "monthly_budget" {
  default = 10000
  description = "Monthly budget limit"
}

# CloudWatch Cost Anomaly Detection
resource "aws_ce_anomaly_monitor" "cost_anomaly" {
  monitor_name    = "cost-anomaly-detection"
  monitor_type    = "DIMENSIONAL"
  monitor_dimension = "SERVICE"
  monitor_specification = jsonencode({
    Dimensions = {
      Key          = "SERVICE"
      Values       = ["Amazon EC2", "Amazon RDS", "AWS Lambda"]
    }
  })
}

# Anomaly alert
resource "aws_ce_anomaly_subscription" "cost_alert" {
  account_id    = data.aws_caller_identity.current.account_id
  display_name  = "Cost Alert"
  threshold     = 100
  frequency     = "DAILY"
  monitor_arn   = aws_ce_anomaly_monitor.cost_anomaly.arn
  subscription_type = "EMAIL"

  subscription_notification_type = "FORECASTED"
}

# Budget with alerts
resource "aws_budgets_budget" "monthly" {
  name              = "monthly-budget"
  budget_type       = "COST"
  limit_amount      = var.monthly_budget
  limit_unit        = "USD"
  time_period_start = "2024-01-01_00:00"
  time_period_end   = "2099-12-31_23:59"
  time_unit         = "MONTHLY"

  tags = {
    Name = "monthly-budget"
  }
}

# Budget notification
resource "aws_budgets_budget_notification" "monthly_alert" {
  account_id      = data.aws_caller_identity.current.account_id
  budget_name     = aws_budgets_budget.monthly.name
  comparison_operator = "GREATER_THAN"
  notification_type   = "ACTUAL"
  threshold       = 80
  threshold_type  = "PERCENTAGE"

  notification_subscribers {
    address              = "[email protected]"
    subscription_type    = "EMAIL"
  }
}

# Savings Plan Commitment
resource "aws_savingsplans_savings_plan" "compute" {
  commitment  = 10000
  payment_option = "ALL_UPFRONT"
  plan_type   = "COMPUTE_SAVINGS_PLAN"
  term_in_months = 12

  tags = {
    Name = "compute-savings"
  }
}

# Reserved Instances
resource "aws_ec2_instance" "app" {
  ami           = "ami-0c55b159cbfafe1f0"
  instance_type = "t3.medium"

  tags = {
    Name = "app-instance"
  }
}

# Reserve the instance
resource "aws_ec2_capacity_reservation" "app" {
  availability_zone       = "us-east-1a"
  instance_count          = 1
  instance_platform       = "Linux/UNIX"
  instance_type           = aws_ec2_instance.app.instance_type
  reservation_type        = "default"

  tags = {
    Name = "app-reservation"
  }
}

# CloudWatch Dashboard for cost monitoring
resource "aws_cloudwatch_dashboard" "cost_dashboard" {
  dashboard_name = "cost-dashboard"

  dashboard_body = jsonencode({
    widgets = [
      {
        type = "metric"
        properties = {
          metrics = [
            ["AWS/Billing", "EstimatedCharges", { stat = "Average" }]
          ]
          period = 86400
          stat   = "Average"
          region = var.aws_region
          title  = "Estimated Monthly Charges"
          yAxis = {
            left = {
              min = 0
            }
          }
        }
      }
    ]
  })
}

# Data for current account
data "aws_caller_identity" "current" {}

# Tag compliance and cost allocation
resource "aws_ec2_instance" "tagged_instance" {
  ami           = "ami-0c55b159cbfafe1f0"
  instance_type = "t3.small"

  tags = {
    Name              = "cost-tracked-instance"
    CostCenter        = "engineering"
    Environment       = "production"
    Project           = "web-app"
    ManagedBy         = "terraform"
    ChargebackEmail   = "[email protected]"
  }
}

3. Azure Cost Management

# Install Azure CLI
curl -sL https://aka.ms/InstallAzureCLIDeb | bash

# Get cost analysis
az costmanagement query \
  --timeframe MonthToDate \
  --type Usage \
  --dataset aggregation='{"totalCost":{"name":"PreTaxCost","function":"Sum"}}' \
  --dataset grouping='[{"type":"Dimension","name":"ResourceType"}]'

# Create budget alert
az consumption budget create \
  --name MyBudget \
  --category Cost \
  --amount 5000 \
  --time-grain Monthly \
  --start-date 2024-01-01 \
  --notifications-enabled True

# List recommendations
az advisor recommendation list \
  --category Cost

# Export cost data
az costmanagement export create \
  --name MonthlyExport \
  --dataset aggregation='{"totalCost":{"name":"PreTaxCost","function":"Sum"}}' \
  --timeframe TheLastMonth \
  --schedule-status Active

# Get VM sizing recommendations
az advisor recommendation list \
  --category Performance \
  --query "[?properties.category=='Compute']"

4. GCP Cost Optimization

# Get billing data
gcloud billing accounts list

# Create budget
gcloud billing budgets create \
  --billing-account=BILLING_ACCOUNT_ID \
  --display-name="Monthly Budget" \
  --budget-amount=10000 \
  --threshold-rule=percent=50 \
  --threshold-rule=percent=90 \
  --threshold-rule=percent=100

# List cost recommendations
gcloud compute instances list \
  --format='table(name,machineType.machine_type(),CPUS:format="@(scheduling.nodeAffinities[0].nodeAffinities[0].key): \
  (@(scheduling.nodeAffinities[0].nodeAffinities[0].values[0]))")'

# Enable committed use discounts
gcloud compute commitments create my-commitment \
  --plan=one-year \
  --resources=RESOURCE_TYPE=INSTANCES,RESOURCE_SPEC=MACHINE_TYPE=n1-standard-4,COUNT=10 \
  --region=us-central1

# Get storage cost estimate
gsutil du -s gs://my-bucket

5. Cost Monitoring Dashboard

# Python cost monitoring tool
import boto3
from datetime import datetime, timedelta
from typing import Dict, List
import json

class CloudCostMonitor:
    def __init__(self):
        self.ce_client = boto3.client('ce')
        self.ec2_client = boto3.client('ec2')
        self.rds_client = boto3.client('rds')

    def get_monthly_costs_by_service(self, months=3) -> Dict:
        """Get monthly costs breakdown by service"""
        end_date = datetime.now().date()
        start_date = end_date - timedelta(days=30*months)

        response = self.ce_client.get_cost_and_usage(
            TimePeriod={
                'Start': start_date.isoformat(),
                'End': end_date.isoformat()
            },
            Granularity='MONTHLY',
            Metrics=['UnblendedCost'],
            GroupBy=[
                {'Type': 'DIMENSION', 'Key': 'SERVICE'}
            ]
        )

        costs = {}
        for result in response['ResultsByTime']:
            for group in result['Groups']:
                service = group['Keys'][0]
                cost = float(group['Metrics']['UnblendedCost']['Amount'])

                if service not in costs:
                    costs[service] = []
                costs[service].append({
                    'date': result['TimePeriod']['Start'],
                    'cost': cost
                })

        return costs

    def identify_savings_opportunities(self) -> Dict:
        """Identify resources that can be optimized"""
        opportunities = {
            'unattached_ebs_volumes': [],
            'unassociated_eips': [],
            'underutilized_instances': [],
            'unattached_network_interfaces': []
        }

        # Check EBS volumes
        volumes_response = self.ec2_client.describe_volumes(
            Filters=[{'Name': 'status', 'Values': ['available']}]
        )

        for volume in volumes_response['Volumes']:
            opportunities['unattached_ebs_volumes'].append({
                'volume_id': volume['VolumeId'],
                'size_gb': volume['Size'],
                'estimated_monthly_cost': volume['Size'] * 0.10
            })

        # Check Elastic IPs
        addresses_response = self.ec2_client.describe_addresses()

        for address in addresses_response['Addresses']:
            if 'AssociationId' not in address:
                opportunities['unassociated_eips'].append({
                    'public_ip': address['PublicIp'],
                    'estimated_monthly_cost': 3.60
                })

        # Check underutilized instances
        instances_response = self.ec2_client.describe_instances()

        for reservation in instances_response['Reservations']:
            for instance in reservation['Instances']:
                opportunities['underutilized_instances'].append({
                    'instance_id': instance['InstanceId'],
                    'instance_type': instance['InstanceType'],
                    'state': instance['State']['Name'],
                    'recommendation': 'Consider downsizing or terminating'
                })

        return opportunities

    def calculate_potential_savings(self, opportunities: Dict) -> Dict:
        """Calculate potential monthly savings"""
        savings = {
            'ebs_volumes': sum(op['estimated_monthly_cost'] for op in opportunities['unattached_ebs_volumes']),
            'eips': sum(op['estimated_monthly_cost'] for op in opportunities['unassociated_eips']),
            'total_monthly': 0
        }

        savings['total_monthly'] = savings['ebs_volumes'] + savings['eips']
        savings['total_annual'] = savings['total_monthly'] * 12

        return savings

    def generate_cost_report(self) -> str:
        """Generate comprehensive cost report"""
        costs_by_service = self.get_monthly_costs_by_service()
        opportunities = self.identify_savings_opportunities()
        savings = self.calculate_potential_savings(opportunities)

        report = f"""
        ===== CLOUD COST REPORT =====
        Generated: {datetime.now().isoformat()}

        CURRENT COSTS BY SERVICE:
        """

        for service, costs in costs_by_service.items():
            total = sum(c['cost'] for c in costs)
            report += f"\n{service}: ${total:.2f}"

        report += f"""

        SAVINGS OPPORTUNITIES:
        - Unattached EBS Volumes: ${savings['ebs_volumes']:.2f}/month
        - Unassociated EIPs: ${savings['eips']:.2f}/month

        POTENTIAL MONTHLY SAVINGS: ${savings['total_monthly']:.2f}
        POTENTIAL ANNUAL SAVINGS: ${savings['total_annual']:.2f}
        """

        return report

# Usage
monitor = CloudCostMonitor()
print(monitor.generate_cost_report())

Best Practices

✅ DO

• Use Reserved Instances for stable workloads
• Implement Savings Plans for flexibility
• Right-size instances based on metrics
• Use Spot Instances for fault-tolerant workloads
• Delete unused resources regularly
• Enable detailed billing and cost allocation
• Monitor costs with CloudWatch/Cost Explorer
• Set budget alerts
• Review monthly cost reports

❌ DON'T

• Leave unused resources running
• Ignore cost optimization recommendations
• Use on-demand for predictable workloads
• Skip tagging resources
• Ignore data transfer costs
• Forget about storage lifecycle policies

Cost Optimization Strategies

• Reserved Instances: 20-40% savings
• Spot Instances: 70-90% savings
• Savings Plans: 15-30% savings
• Storage optimization: 30-50% savings
• Data transfer optimization: 10-20% savings

Resources

• AWS Cost Management
• Azure Cost Management
• GCP Cost Optimization
• FinOps Foundation