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Cloud Cost Optimization: The Basic Principles to Follow

Cloud computing is not new. A lot of businesses have already used the technology in their everyday operations. And it has proved to be an effective tool to make the job easier and more efficient.

But this shift brings with it a lot of complexities. A lot of companies cited that optimizing cloud computing costs is their biggest challenge when using the cloud. Their cloud expenses exceed their original budget by 20% to 40%

If you don’t have a plan before switching to the cloud, you will more likely overspend. Some of the reasons behind overspending include mismanaged resources and stacking cloud wastes. With cloud cost optimization, you can avoid these and save a lot on cloud computing costs.

To have an effective cloud cost management strategy, you first need to understand its basic principles. This article will cover the fundamentals of cloud computing and more advanced principles and strategies. Reading this until the end will help you navigate the world of cloud cost optimization and maximize your investment.

The Basic Principles of Cloud Cost Optimization

The best thing about cloud cost optimization is that you can use tools and software to make it possible to work efficiently. Monitoring your expenses is a crucial aspect of cloud cost management. With such tools, you find areas in the cloud where you’re overspending and optimizing costs quickly. 

Available cloud cost optimizers include those that offer specific cloud cost services. You can also find some that have everything you need from cloud cost optimization software. They can connect clusters from several cloud providers, analyze your workloads, and provide cost-saving recommendations.

But these tools are just one part of the whole formula for optimizing your cloud costs. Tools are often only as effective as the person using them. To make these cost optimizers work for you, you need to follow some basic principles of cloud cost optimization. By doing so, you can ensure that you’re getting the most value for your money.

1. Identify Your Needs And Set a Budget For How Much You Should Consume

If no one is aware of what the expectations are, using random strategies won’t work. To increase your cloud cost savings, you need to know how much your company consumes and set budget expectations.

Find out the specific results that affect your cloud services design and avoid overengineering applications. You can have your Cloud Center of Excellence (CCoE) department set requirements for this. They need to have a deep understanding and challenge presumptions. It’s also important to clarify what each application is meant to achieve.

This includes working with stakeholders and product owners to understand the value that each application provides. Additionally, they identify the specific indicators that use particular architectural concepts.

The following questions will help you identify how much workload your company consumes:

  • How delicate is the data you’re handling?
  • What happens if the data is lost completely or is just temporarily unavailable? Is it necessary for this application to have service-level goals?
  • What is your expected performance objective?
  • Are there any industry-specific laws, like HIPAA, that the data must follow?

2. Choose the Right Provider

Once you have a clear understanding of your needs, the next step is to choose the right cloud provider. There are many cloud providers to choose from, each with its unique offerings and pricing models. Compare options and choose a provider that aligns with your business needs and budget.

Negotiating With Your Cloud Provider

If you are selecting a new cloud provider, you must negotiate with them. This will help you get the best price possible and save a significant amount of money. 

Establishing a Cloud Service-Level Agreement (SLA)

You must create a detailed cloud SLA that outlines the responsibilities of both you and your cloud provider. This will help you identify any potential issues before they become major problems.

3. Take Advantage of Different Cost Optimizer Pricing Models

You should also choose the pricing models that best suit your company. The pricing models for cloud computing vary, depending on different factors, including:

  • The type of cloud service you need
  • The associated SLA
  • Data integrity
  • Service Accessibility

Fortunately, a lot of cloud providers offer promos and discounts for repeat customers. Some also have a huge discount on usage-based pricing and reserved instances (RI). By taking advantage of these pricing options, it is possible to generate huge cloud cost savings.

These pricing models should not be static and can change over time. To make sure you are receiving the best price possible, conduct an audit of your cloud spending at least once a year.

4. Optimize Your Cloud Resources

Cloud cost optimization also revolves around managing your cloud resources. You can use cloud cost optimizers to monitor resource usage. Most of them let you identify areas where you’re using too much or too few resources. By doing so, you can reduce waste and ensure that you’re only paying for the resources you need.


One way to optimize resource utilization is to use auto-scaling. Auto-scaling lets you automate how you scale your resources up or down based on demand. This makes sure that you have the resources you need when you need them without overpaying for unused resources. 

This is useful if you have workloads that have fluctuating demand, such as web applications.

Containers and Container Orchestration Platforms

Another effective method to optimize costs in the cloud is to use containers and container orchestration platforms. With containers, you can package and deploy applications and services in a consistent and portable manner. This will make it easier to scale and manage your infrastructure. 

Using containers and container orchestration platforms, you can improve resource utilization. You can also reduce the number of resources required to run your workload.

Data Storage Organization

You don’t need to use all of your company data. Some become less accessible as they become older. Social media data, for instance, loses significance with time. Reduce expenses by keeping outdated or less significant data in a less expensive service.

Serverless Computing

Those using serverless computing hand over control of their cloud infrastructure to a different cloud provider. By doing so, they can gain dynamic deployment, zero-touch autoscaling, and improved resource use.

Serverless computing services appear to be cost-effective. But they eventually become expensive and their benefits start to erode. To make it work, you should only use serverless technologies for the appropriate use cases.

5. Create a Culture of Cost Optimization

It is also important that your employees optimize costs within your organization. You can educate them about the importance of cloud cost optimization. Encourage them to be mindful of how they use your cloud resources. 

You should also set policies and procedures for managing cloud costs. This can include setting limits on resource usage and conducting regular reviews to identify areas for improvement. 

Remember that building a culture within a company includes habitual practices. Implementing cloud cost optimization practices will help your company build a culture of cost optimization

6. Review and Monitor Your Cloud Costs

To get the best value for your money, review and monitor your cloud costs. You can use cloud cost optimizers to track and analyze your cloud usage and costs. It also helps with conducting regular audits to identify areas for improvement.


Cloud cost optimization may sound easy, considering the available tools you can use. But it is a set of processes that every business needs to manage over time. 

Create a plan to optimize costs in the cloud. Find the right cloud service provider and choose the best pricing model for your company’s needs. Use different strategies to reduce your spending while making the most out of the service. Finally, analyze and track your cloud spending habits, and make sure to find out areas of improvement.

By following the basic principles of cloud cost management, you can maximize the cloud and reduce unnecessary costs.

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