Managing cloud costs and knowing exactly where your cloud spend goes — and why — can be a nearly impossible task without the right tools. If you’re using cloud-native technologies such as microservices, containers, and Kubernetes, you probably don’t have full visibility into your costs.
AWS bills often bury this information behind rows of text.
An ideal platform should let you identify which products and features drive your cloud spend or which customers are causing you to spend more. With this cost intelligence, you can make informed engineering and business decisions, such as how to price a product or design cost-optimized software.
Some of the world’s biggest companies, like Netflix and Lyft, already know this — and now you can implement the same best practices and principles for cost management that these top tech brands use.
In this guide, we’ll take a closer look at the practice of cloud cost management, its benefits, and the cloud cost management tools you can use to get started.
Table Of Contents
What Is Cloud Cost Management?
Cloud cost management, sometimes called cloud cost optimization, is the practice of monitoring, measuring, and controlling cloud spend on providers like AWS, Microsoft Azure, and Google Cloud. The goal is to find ways to optimize costs and maximize your cloud investment.
Traditionally, cloud cost management has focused on waste reduction efforts, such as eliminating under-utilized or forgotten resources and optimizing purchasing decisions (e.g., reserved instances and savings plans).
However, as companies evolve to adopt next-generation cloud services — cloud cost management is increasingly focusing on architectural optimization. Through this lens, applications can be built so that infrastructure is highly elastic — so your company only pays for what you and your customers use.
For example, serverless options, like AWS Lambda, offer an incredibly granular level of on-demand infrastructure — down to the millisecond. With the right architecture, you can build products utilizing these services that tightly align cost and customer utilization.
Beyond optimizing software architecture, organizations should also look to measure unit cost, COGS, and cost per customer as part of their cloud cost management strategy. Increasing cloud costs aren’t always a bad thing. For example, it’s normal for a business to see their AWS bill go up if they are bringing on more and more customers each month.
What’s more important to know is whether your unit economics are increasing, decreasing, or remaining flat while you onboard these new customers.
If, for example, cost per customer is increasing, this may be a sign that one or more of your customers are using your product more than others. Knowing this, you’d want to figure out how those customers are using your product (e.g., if they are using a specific feature a lot) and from there, decide if there are ways to can optimize that part of your product for lowered costs or decide if you need to change up your pricing structure.
The Benefits Of Cloud Cost Management
Cloud cost management has many important benefits that are interconnected, straightforward, or hidden. These benefits include being able to:
- Forecast, plan, and budget your cloud spend with greater accuracy.
- Empower engineers to see the cost impact of their work.
- Discover areas of your software that could be rearchitected for increased profitability (in a time when most SaaS companies are reporting lower gross margins).
- Identify your least profitable technologies, customers, and projects within the cloud.
- Decide whether to adjust your pricing structure, decommission some features to cut operational costs, or scrap some projects to make room for more profitable ones.
- Calculate the effectiveness of and take advantage of load balancing, autoscaling, capacity reservation, volume discounts, and saving programs such as the AWS Savings Plans.
- Determine the best services to use for each application (e.g., Should you use AWS Lambda or EC2 instances for shorter bursts of computing activity vs. application activities that are long-lasting and latency-sensitive?).
The Best Cloud Cost Management Tools
Here are the best cloud cost management tools available today — that will help you reduce, optimize, and understand your costs.
CloudZero is not your typical cloud cost management tool. As opposed to producing rows and columns of absolute cloud costs that provide little or no business insight, CloudZero digs deep and breaks down costs in a way that enables you to see the where, when, and how of your cloud spend — all without endless manual tagging.
This cloud cost intelligence platform helps engineers become more cost-conscious, aligns engineering with finance, and puts cloud costs in the context of your specific business.
With CloudZero, you can:
- Align cloud costs to teams, customers, unit cost KPIs, product features, and more — so you can tell who, what, when, how, and where your cloud budget is going.
- Measure cost per customer so that you can tell how much you spend to support a particular customer and know if you need to increase your prices to boost gross margins.
- See which features of your application consume the most resources, which are most popular, and which unpopular ones you can decommission.
- Receive alerts via Slack when cost anomalies, like cost spikes, occur, so you can take action to avoid expensive cost overruns.
- Get real-time cost monitoring across public, private, hybrid, and multi-cloud environments, including Kubernetes and Snowflake costs.
- Receive expert cost coaching to help you stop guessing and make informed decisions from day one.
- Utilize AI and ML to continuously identify AWS cloud cost management best practices and savings opportunities.
CloudZero can also help you forecast future costs based on historical usage data to reduce monthly surprises.
2. Amazon CloudWatch
CloudWatch is AWS’ native tool for managing cloud costs. Because it pulls metrics and logs from over 70 AWS applications, services, and resources in near-real-time, it provides in-depth AWS cost reporting. Then it displays them on a single dashboard for more straightforward computation.
You can also collect custom metrics for your AWS application, set budgets, set cost anomaly alarms, and automate actions on ECS, EKS, and Kubernetes clusters to respond to changes in costs.
AWS Cloud Explorer, AWS Cost and Usage Report, and AWS Budgets are other native AWS cost management tools you can use in combination with Amazon CloudWatch.
3. Azure Cost Management + Billing
Like CloudWatch to AWS, Azure Cost Management + Billing is the cloud cost management tool native to Microsoft’s Azure Cloud Service.
Like other native tools, you get the must-haves, such as monitoring Azure cloud costs, cost analysis, budgeting, exporting cost management data, and seeing cost optimization recommendations based on Azure cost management best practices. The tool also lets you manage billing data from Azure and AWS if you use both in combination.
Densify includes a cloud resource optimization tool in its platform. You can see several cost savings opportunities and methods for lowering your cloud computing charges. Densify can alert you if you are over allocating resources to instances or using an inefficient family of instances in the first place.
5. Virtana Optimize
Virtana Optimize, formerly Metricly, is a cloud optimization platform with several cloud cost management features. It can help you identify wasted resources, do rightsizing, analyze cost vs. utilization reports, receive Azure VM instances and Amazon EC2 instance optimization recommendations, and even plan the most cost-effective and smooth cloud migrations.
The ParkMyCloud platform offers a valuable tool for organizations using public clouds like AWS, Azure Cloud, Google Cloud Platform, and Alibaba Cloud.
You can control costs by rightsizing and scheduling when your resources run and stop. You can also create reports and share cost insights via Slack and Teams, integrate with enterprise tools like monitoring and CI/CD tools, and even override schedules when needed.
With Harness you can track usage data, including utilized, unallocated, and idle resources by the hour.
Harness does not quite map costs to features or tie costs to specific projects, such as deployments, but it does provide decent context for cost reporting. It also includes cost anomaly detection and alerting to help you respond to potentially expensive activities.
As a financial management tool for monitoring, reporting, and analyzing cloud costs, Apptio’s Cloudability offers budgeting and forecasting, and rightsizing capabilities.
In addition, you can use it to plan reserved instances, manage container costs, find anomalies and set alerts, as well as uncover opportunities for cost savings. Cloudability also integrates and pulls data from cloud monitoring tools like PageDuty and DataDog to provide more in-depth insights on cloud costs.
Team members who want more visibility into multi-cloud environments might find the Flexera cloud cost management tool useful.
This tool includes many of the “standard” features of a cost management tool; cost analysis, reporting, and forecasting. However, it also offers cost allocations by cost center and team, automatic budget alerts, and decent visibility into private and public clouds.
VMware’s CloudHealth is their native cloud financial management tool — although there is a CloudHealth for AWS version.
You can use CloudHealth’s showback and chargeback features to increase cloud cost accountability — so you can see what cost centers are driving up your cloud costs. Then, you can monitor your cloud costs over time and use that data to predict future cloud expenditures. It also empowers you to see wasted spend, rightsizing opportunities, and export cost reports.
11. CloudCheckr Finance Manager
If you want to consolidate cloud billing data from both public and private clouds without using error-prone methods such as manual spreadsheets and custom scripts, CloudCheckr can also help.
The CloudCheckr Finance Manager tool is fully automated, so it’ll set your engineers free to innovate and finance teams up for cost insights that improve cloud cost planning and optimization strategies.
With nOps, you get an automated way to collect, analyze, and track your spend on AWS. Once you set nOps up, it leverages machine learning to learn your usage patterns.
It then automates all aspects of cost optimization; detect and stop idle and unused resources, manage reservations, and run workloads on the most affordable spot instances (over on-demand instances).
The SaaS platform also optimizes container clusters, and can help achieve alignment with the AWS Well-Architected Framework.
13. AWS Cost Explorer
If you run workloads exclusively on the AWS ecosystem, Cost Explorer provides a native tool for tracking, analyzing, and managing costs.
In particular, Cost Explorer tracks your AWS usage and associated costs. It then displays this data in a visual way, compared to the raw columns and rows that an AWS Cost and Usage Report offers.
Cost Explorer leverages other AWS monitoring tools to capture and report the data, including AWS CloudTrail, to deliver hourly and resource-level granularity, as well as Reservation and Savings Plan reports.
14. Azure Cost Management + Billing
Azure Cost Management + Billing provides cost overviews for both the Microsoft Azure cloud and Amazon Web Services (AWS) in one place. As a native Azure tool, it works seamlessly with other Azure solutions, such as Application Insights, Azure Monitor Metrics, and Container Insights.
This ensures Azure Cost Management + Billing fetches deep cost insights, and with, Azure dashboards and workbooks, visualizes the insights so they are more easily digestible. It also includes additional capabilities, including budgeting and forecasting.
With Finout, you can analyze your cloud spend deeper than many native tools, such as Cost Explorer and Azure Cost Management + Billing. Finout enables you to analyze your usage-based costs through customizable dashboards and reports.
You can see your costs per cost center, namespace, and more. In addition, you can set up custom alerts to reach your team at certain usage thresholds.
Ultimately, Finout is a multi-cloud platform, enabling you to have a unified view of costs across major cloud providers like AWS and GCP, as well as platforms like Kubernetes, Snowflake, and Databricks.
ProsperOps eliminates the effort, latency, and risk of manually managing inflexible and long-term reservations and savings plans. The result; enabling you to minimize commitment risk and maximize savings.
With its Effective Savings Rate (ESR) approach, ProsperOps offers a simplified, fully automated way to manage AWS discount instruments. ProsperOps is a founding member of the FinOps Foundation, a FinOps Certified Platform, an AWS Advanced Technology Partner, a 2021 Gartner Cool Vendor in Cloud Computing, and a CloudZero Partner.
In fact, you can access your ESR via the CloudZero Discount Instrument Summary dashboard, as you can see here:
ProsperOps ESR via the CloudZero Discounts optimization dashboard
Xosphere is a robust Spot instance orchestration tool. It uses advanced AI and ML to learn your usage patterns and uses the information to pick the most optimal AWS spot instances for your workloads. The Xosphere Instance Orchestrator works natively with Amazon Auto Scaling Groups, monitoring the instances within each group.
Once Spot instances become available at a reasonable price, it replaces On-Demand instances with up to 80% less expensive Spot instances.
As soon as this Spot instance capacity becomes unavailable at a reasonable price, Instance Orchestrator replaces them with On-Demand instances without downtime. Instance Orchestrator runs in the background, shifting between the two instance types as needed to ensure high availability and low costs. Xosphere is also a CloudZero Partner.
Cast.ai is an all-in-one Kubernetes management platform with advanced K8s cost management capabilities. It uses AI to continuously inspect your clusters. Cast AI then applies K8s cost optimization changes in real-time to ensure optimal configuration.
These automated changes can include applying cluster hibernation, rightsizing, and instant rebalancing.
Also, Cast AI delivers container security monitoring and optimization to help prevent issues that could blow a hole in your cloud budget. The platform integrates well with EKS, AKS, GKE, KoPs, and OpenShift for AWS.
Like Cast AI, Kubecost is a robust Kubernetes cost monitoring and management platform. It delivers continuous, real-time visibility into your K8s cluster cost data.
Kubecost also unifies your K8s cost data with other cost data from your infrastructure or external cloud services.
Better yet, it attributes these costs by breaking your bill by common Kubernetes concepts, including namespace, service, and deployment. You can also see your costs across multiple clusters and sends you custom cost optimizations recommendations you can choose to apply.
Which Cloud Cost Management Solution Is Best For Your Company?
Ultimately, your cloud cost management tool should give you complete visibility into your cloud spend — letting you know where your spend goes, how, and why — and enable you to make informed engineering, product, and business decisions with cost in mind.
Some of these tools will allow you to monitor spend or reduce costs — but CloudZero is the only platform that connects costs to the business metrics you care about.
On top of traditional cost optimization and management features, CloudZero also aligns costs with cost per customer, COGS, and unit costs like cost per feature, product, team, environment, and more.
CloudZero enables engineering teams to drill into costs from a high level down to the individual components that drive your cloud spend — and see exactly what AWS services cost you the most and why. Finance can use the platform to better understand what’s driving your AWS bill and distinguish between healthy growth and excess spend.