If you have not been optimizing your cloud costs, there’s a good chance you are overspending to maintain your cloud technology. Although cloud service providers typically promise to only charge you for the resources you use, that is hardly the case in reality. Therefore, it’s on you to manage and optimize your cloud costs to cut wasteful spending.

If you need help figuring out where to start on cloud cost optimization, you’ve come to the right place. In this article, GlobalDots discusses best practices to effectively manage and optimize cloud costs. So, read on!

7 Best Practices for Cloud Cost Optimization

After you learn what is cloud cost optimization, your top priority should be knowing the best practices to manage costs. These practices can help you cut waste, find mismanaged resources, right-size services to scale, and leverage discounts.  Here are the seven best practices to effectively manage and optimize cloud costs:

1. Identify unused resources

cloud costs

Have you ever invested in resources that you ended up not using? We bet you wished you had kept the extra money for other needs. Many cloud technology users end up in this avoidable situation because they don’t know how to deal with it. The simple solution is identifying unused resources and removing them from your subsequent cloud bills.

Such unused resources may come from forgetting to shut down a temporary server you set up for a single-use operation or not deactivating storage linked with terminated instances. These common anomalies cause an unnecessary increase in cloud costs. So, check for them and shut them down when necessary to optimize your cloud costs.

2. Merge idle resources

Paying for what you do not use is a classic case of wasteful spending or overspending. The same applies to paying for idle cloud resources, which many organizations do. Using 40% of your cloud resources and getting charged for using 100% is not a good thing for any organization.

You can fix this problem by identifying idle resources and merging them. This way, you can pay for only resources that you use. Instead of saving idle resources for traffic spikes or busy seasons, we recommend leveraging cloud features such as auto-scaling, on-demand options, and load balancing to scale up capacity while optimizing cloud costs.

3. Set budgets

One of the reasons for overspending on cloud resources is the lack of planning. Any organization that does not plan its cloud spend cannot effectively optimize costs. Therefore, we recommend setting budgets for your cloud spend to control wasteful spending.


Instead of choosing an arbitrary number, task all team members or departments within your organization to communicate their cloud needs. After all, employees on the ground have the best chance of knowing the right resources to invest in. After ascertaining the cost requirements, set a defined budget for required resources.

With a cross-functional team for cloud budget, you can spend on only the right resources and effectively optimize cloud costs.

4. Monitor and correct cost anomalies

Anomalies in cloud costs also complicate efforts at cloud cost optimization. There are usually small anomalies in cloud usage during some seasons, leading to a slight rise in cloud spend. However, these small variations are nothing compared to sudden unexpected spikes in cloud costs, which significantly add to your cloud bills.

You can manage these cost anomalies by monitoring and correcting them before they ruin your budget. We recommend investing in tools that provide the cost management console. This console monitors usage, sets budgets, forecasts cloud costs, and optimizes them.

Essentially, such monitoring tools can help you identify spending anomalies by notifying you when you pass spending thresholds so that you can correct the variations.

5. Rightsizing resources

Cloud management

Rightsizing means analyzing computing services to find the best size for the user’s operational requirement. The aim is to ensure that systems and instances utilize the right number of resources without overspending on cloud resources. That makes rightsizing resources a reliable practice for optimizing cloud costs.

Thankfully, cloud solutions often feature rightsizing tools you can leverage for cloud cost optimization. These tools typically notify you when the cloud costs exceed a defined percentage within a predetermined period. You can optimize your cloud costs by setting your tool to terminate unused resources after this period.

Besides helping to reduce cloud costs, rightsizing tools also help to facilitate the peak performance of your cloud resources.

6. Invest in reserved instances

Reserved instances (RIs) are lucrative discounts that cloud service providers offer based on upfront payment and time commitment. If your organization is embracing the cloud for the long haul, RIs are smart investments that can aid your cost optimization efforts.

When you purchase RIs and commit to using them for a defined period, the cloud providers provide discounts going as high as 70%. However, we advise that you do thorough research and determine that you’ll need the resources throughout the period you’re paying for before paying upfront. An analysis of your previous usage patterns can help you determine your future needs.

7. Use autoscaling

Autoscaling is exactly what it sounds like; it automatically scales your server capacity to maintain normal performance. This tool adjusts your server capacity at the lowest possible cost. Besides saving cloud costs, autoscaling prevents the waste of time and human resources.

cloud cost management

Instead of requiring a response to traffic spikes in real-time, it automatically activates the necessary instances and resources by adjusting the number of active cloud servers. Hence, you won’t have to spend valuable time and manpower monitoring and adjusting the server capacity.

Cloud Costs: Conclusion

In a 2020 study, McKinsey found that enterprises estimated they wasted around 30 percent of their cloud spend. They wasted a significant percentage of their total cloud spend because they did not understand the concept of cloud cost optimization, which stopped them from taking the necessary steps to cut wasteful spending.

Now, you can start the fruitful process of saving costs and maximizing your organization’s profit.

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