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Seven reasons customers are saving money with AWS today:

1. AWS helps customers replace up-front capital expense with low variable cost.
2. Massive economies of scale and efficiency improvements allow us to continually lower prices.
3. Multiple pricing models allow you to optimize costs for both variable and stable workloads.
4. Cloud computing drives down IT labor costs both up-front and on an on-going basis.
5. AWS delivers a premium security spec at non-premium prices.
6. AWS allows customer workloads to be highly available for a fraction of the cost of self-hosting.
7. With AWS, you save more as you grow bigger.

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Reason 1: AWS helps customers replace up-front capital expense with low variable cost.

Building on-premises infrastructure can be slow and expensive. There are many components that need to be in place, including expensive hardware that needs to be ordered, paid for, installed and configured; all before you are able to run any of your applications. And it’s hard to keep track of how many servers and how much storage you have, and at what capacity it is being utilized.

With AWS, getting started is easy as there are no up-front costs and no long-term commitments required. This means you can begin running your applications in AWS without investing in any infrastructure, software, or hardware.

With usage-based pricing the cost of every workload is transparent, giving you the ability to accurately charge back to departments with an all-in cost with the timeline of your choice – hourly, daily, quarterly – whatever you choose.

• “If we were to use the traditional on-premises datacenter, we would have spent $34 million dollars in hardware and maintenance expenses during the first two years. With AWS cloud, we met our reliability and performance objectives at a fraction of the cost.” Mr. Chun Kang – Principal Engineer, Samsung

• “Using AWS lead us to move from CapEx to OpEx with better scalability, improved responsiveness, and greater flexibility as a result." Dominique Moulin, Corporate IT/IS/IT Manager for Lafarge Group

  Read the case study

• “With AWS we avoided significant costs, including $800,000 in CapEx and $5,000-8,000 per month in OpEx costs.” Waleed Hanafi, SVP-CTO, Global Blue

  Read the case study

Reason 2: Massive economies of scale and efficiency gains allow us to continually lower prices.

AWS builds and manages infrastructure at a massive scale. This scale provides cost efficiencies through a combination of high-volume, low cost procurement and through constantly evolving how we run our service to make it more cost-efficient. With the efficiencies of our scale and expertise, we have been able to continuously lower our prices. We’ve lowered prices 19 times since the start of AWS in 2007. Lowering prices is in our DNA. We’re a company that works hard to lower its costs so that we can drive down costs for our customers.

Reducing pricing is not just a matter of passing on the benefits of economies of scale, although that certainly plays a role. We continuously apply innovation to the design of datacenters, servers, storage and network. to drive new efficiencies and higher reliability.

• “It's clear that as Amazon's own costs fall, they are passing the savings on to customers rather than banking them as profit.” Seeking Alpha, March 7, 2012

  Read the article

• “Amazon Lowers Global Cloud Costs. Amazon has yet again dropped their cloud prices not once, not twice, but nineteen times - in just six years.” ITProPortal, March 7, 2012

  Read the article

• “When Amazon Web Services isn’t adding new services, it’s cutting prices on those it already offers. The speed with which Amazon rolls out new services, and commoditizes them with its pricing, is its chief advantage.” GigaOm, March 6, 2012

  Read the article

Reason 3: Multiple pricing models allow you to optimize costs for both variable and stable workloads.

There are different types of workloads that organizations need to handle, and they can change over time. Some workloads have stable usage patterns, like business applications with a consistent number of users and data or established web sites. Other workloads can be entirely unpredictable, like a new product web site or a social game. And some workloads can experience “spiky” loads that vary a lot based on the season, time of day or day of the week, like eCommerce sites around the holidays or gaming sites on nights and weekends.

With AWS, you can match Amazon EC2 “instance types” to the usage pattern, which both saves you money and allows you to scale to meet your performance objectives. With on-premises infrastructure you really only have one option for all three usage patterns – you have to pay up-front for the infrastructure you think you’ll need, then hope that you haven’t over-invested, paying for unused capacity, or under-invested risking performance or availability issues.

For unpredictable workloads, Amazon EC2 On-Demand Instances deliver maximum flexibility along with low hourly prices. You can request compute services on-demand to match AWS resources closely to the usage requirements of your application, and pay only for what is used.

If you have predictable, steady-state workloads, you can save a significant amount of money by buying Amazon EC2 Reserved Instances, which allow you to save up to 69% compared to standard Amazon EC2 pricing. For cost modeling exercises, we encourage customers to use Reserved Instances as the best AWS pricing model to provide an apples-to-apples comparison with on-premises servers.

For spiky workloads, you can use a combination of On-Demand resources for unpredictable spikes and Reserved Instances for the predictable base load.

If you have flexibility on when your application will run, such as with heavy analytics and modeling, you can bid on unused Amazon EC2 compute capacity, called Spot Instances. They can provide the most inexpensive way to run Amazon EC2 instances. They allow customers to bid on unused Amazon EC2 capacity and run those instances for as long as their bid exceeds the current Spot Price. Spot Instances are complementary to On-Demand Instances and Reserved Instances, providing another option for obtaining compute capacity at the lowest costs.

• By expanding our clusters with Reserved Instances and On-Demand Instances, plus the Amazon EC2 price reductions, we have reduced our analytics costs by over 50% when compared to hosting it ourselves.” Matthew Rathbone, Software Engineer, foursquare

  Read the case study

• Cycle Computing created a high performance 30,000 core cluster using AWS, on behalf of a top 5 pharmaceutical company, who needed to perform critical R&D analysis. They used Spot Instances to perform molecular modeling for just $1,279 per hour for 7-8 hours at a total cost of around $10,000. We estimate, this kind of task using industry standard servers would have cost $18M and taken months rather than hours to complete.

  Learn more about CycleComputing's CycleCloud HPC Cluster

• SEGA reduced server costs by over 50% with On-Demand Instances when unplanned load spikes hit after game launches.

  Read the case study

Reason 4: Cloud computing drives down IT labor costs both up-front and on an on-going basis.

With on-premises infrastructure, personnel costs make up a large part of the ongoing operating costs. It’s no wonder that so much time, and expense is spent on IT administration, when you think of all things that need to be done just to run the most basic datacenter. This starts with procuring the datacenter space, arranging power, cooling and physical security, then buying the servers, wiring them up, connecting them to the storage and backup devices, building a network infrastructure, and making sure all of the hardware is imaged with right software, provisioned and managed, and that ongoing maintenance is performed, and problems fixed in a reasonable timeframe.

When you get your infrastructure as a service, you free up skilled resources to concentrate on the things that help drive the business. Instead of getting caught in the trap of building larger teams that do more and more undifferentiated datacenter administration, you enable people to spend time on designing and delivering high value technology for the business.

• “We have seen cost savings in excess of 70%, no new staff to support new stacks, hundreds of man hours saved each week! Not having to provide server engineers, network engineers, security staff, etc., means a lot to us both in costs and management.” Michael Higgins, Chief Technology Officer, Advanced Innovations

  Read the case study

• “With AWS, there was no upfront investment in hardware, no hardware procurement delay, and no need to hire additional operations staff.” – Mark Taylor, Program Director, Razorfish

  Read the case study

• “Zero software costs, minimal staff costs, low barrier to development, responsiveness and reliability.” Jay Ridgeway, Chief Architect, ShareThis

  Read the case study

Reason 5: AWS offers a premium security spec at non-premium prices.

In order to provide end-to-end security and end-to-end privacy, AWS builds services in accordance with security best practices, provides appropriate security features in those services, and documents how to use those features. The AWS security measures, certifications, accreditations, and features meet the security criteria set out by some of the most discerning and security conscious customers in large enterprise as well as governmental agencies. These benefits and capabilities are often out of reach for small, mid-sized, and some large enterprises. They are available at no extra cost, regardless of customer size or amount of spend with AWS.

Our customers benefit from the premium security capabilities we’ve built into our service, giving them enterprise-grade security with start-up affordability.

There are four attributes to the AWS security model that are typically expensive for companies to implement with self-hosting. These include:

• Certifications and Accreditations. AWS in the past has successfully completed SAS70 Type II audits, and as of September 2011 publishing a Service Organization Controls 1 (SOC 1) report. In addition, AWS has achieved ISO 27001 certification, has been successfully validated as a Level 1 service provider under the Payment Card Industry (PCI) Data Security Standard (DSS), and AWS has now been deemed FISMA-Moderate level.
• Physical Security. AWS implements state of the art physical security with a variety of physical controls.
• Secure Services. Each of the services within the AWS cloud is architected to be secure and contains a number of capabilities that restrict unauthorized access or usage without sacrificing the flexibility that customers demand.
• Data Privacy. AWS enables customers to encrypt their personal or business data within the AWS cloud and we publish backup and redundancy procedures for services. The latest information on our security is available in the AWS Security and Compliance Center.

Our customers get all of these advanced capabilities, which would often be out of their reach, at no extra cost.

• NASA Jet Propulsion Laboratory declares AWS secure for Mars program. “You’ll learn that in many ways cloud computing can actually offer you a more secure solution,” – Khawaja Shams, Mission Cloud Expert, NASA Jet Propulsion Laboratory

  Watch the video
• “In essence, the security system of AWS’s platform has been added to our existing security systems. We now have a security posture consistent with that of a multi-billion dollar company.” – Jim Warren, Chief Information Officer, Recovery Accountability and Transparency Board (RATB)
  
  Read the case study
• “Choosing AWS has spared us hundreds of thousands of Euros in hardware, facilities, security systems, sysadmin resources, etc.” Philippe Honigman, President, ftopia
  
  Read the case study
• “The solution was an unprecedented achievement in the legal technology industry made possible by the security in the AWS Cloud and Nextpoint’s proprietary technologies.” Ben Wolf, VP of Research and Development, Nextpoint
  
  Read the case study

Reason 6: AWS allows customer workloads to be highly available for a fraction of the cost of self-hosting.

Everyone wants their apps to be highly available and reliable. But making that a reality can be expensive and complicated. You need to overprovision to insure you have enough capacity in every part of the system. The app should be scaled out over multiple secure data centers on separate grids and flood plains for resiliency. This approach requires significant up-front costs, a high level of ongoing operating costs, and requires complex administration. Achieving this level of high availability on-premise can be prohibitive expensive for many companies, and for those that can afford it, utilization of these secondary assets is often very low.

The AWS platform is unique because it enables you to build fault-tolerant systems at the click of the mouse, with a minimal up-front financial investment. There are a number of advantages to using AWS to implement highly available apps including the following:

• Availability Zones (AZs). Data center infrastructure that operates independently, providing customers easy access to distributed data centers, at no extra cost. There are also many Regions worldwide, each of which are comprised of multiple AZs. This provides a platform which is ideal for deploying high availability applications which span multiple AZs. Plus they have consistent APIs, allowing you to choose the lowest cost region that meets your needs.
• Highly durable storage. Amazon S3 is designed to deliver 11 nines of durability. That means you don’t have to worry about duplicating or distributing your data.

For more information on architecting high availability applications, visit ourArchitecture Center.

• PBS improved availability to over 99.99%.
  
  Watch the video
• SEGA use the high availability Multi-AZ database deployment to handle live game metadata and user-generated content, for enterprise-grade fault tolerance.
  
  Read the case study
• Outback and Engauge use Amazon RDS across multiple AZs to ensure high availability for its databases.
  
  Read the case study

Reason 7: With AWS, you save more as you grow bigger.

One of the misconceptions we often encounter is that the benefits of the Cloud only apply to small customers. Some people theorize that when you get to a certain size, you outgrow the advantages of AWS’ economies of scale. Not everyone realizes that on any given day AWS adds enough new server capacity to support Amazon’s entire global infrastructure in the company’s fifth full year of operation, when it was a $2.76B annual revenue enterprise. Even the largest and the fastest growing customers benefit from AWS’ scale.

Large customers benefit and save in a number of ways. These include:

• Tiered pricing. Tiered pricing on more services translates into automatic price breaks for larger customers. Consuming higher quantities of a number of services can translate into discounts that add up. In March 2012, we extended these volume discounts to Amazon EC2 Reserved Instances. Now customers can save even more as their Reserved Instance purchases grow.
• Continuous price reductions. AWS has repeatedly lowered prices—in fact we’ve lowered prices on 19 different occasions in the last few years.
• Relentless innovation. Large customers often benefit disproportionately from the growing number of AWS services. Because large customers tend to require a larger number of services, using new AWS services drives down costs across the IT services stack.
• Custom pricing. What if none of our pricing models fit the exact requirements of your project? Custom pricing is available for high volume projects with unique requirements. For assistance, contact us to speak with a sales representative.

AWS is meeting the needs of a growing number of customers with extreme requirements. We are continuously looking for new ways of driving down costs for our largest customers.

• When foursquare grew to over one million dollars of Reserved Instances usage, they reduced their costs by an additional 10%.
  
  Read the case study
• “Amazon Leads Price War: Drops AWS Pricing Again, Leans Heavy on Reserved Instances. While this is sure to be music to the ears of all AWS customers, the news is best for large customers using EC2: Amazon has also created volume tiers for EC2 Reserved instances.” ReadWriteWeb, March 6, 2012
  
  Read the article

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Resources and Tools

The following tools will help you evaluate whether migrating existing applications or launching new applications on the Amazon Web Services cloud makes sense to your business from a cost and ROI perspective.

• The Total Cost of (Non) Ownership of a NoSQL Database Service (pdf) - New!
  Want to know how cost-effective it is to use a NoSQL database cloud service such as Amazon DynamoDB versus running a NoSQL database software hosted on-premises or in the cloud? This whitepaper will help you understand the different cost factors involved in deploying and managing a scalable NoSQL database solution. You will learn about the TCO savings of using a NoSQL (non-relational) database cloud service such as Amazon DynamoDB over equivalent NoSQL database software that is deployed on-premises or hosted in the cloud.

• Amazon EC2 Cost Comparison Calculator (xls) and User Guide (pdf)
  This Microsoft Excel-based cost-comparison calculator tool is designed to help you quantify the direct economic benefits (or costs) of cloud computing. The full spreadsheet is provided as a starting point so that you can use or modify the default assumptions based on the unique aspects of your business to determine the annual cost of Amazon EC2 vs. co-location or on-site computing resources. The accompanying user guide provides a detailed explanation of how to best utilize the tool.

• Amazon RDS Cost Comparison Calculator (xls) and User Guide (pdf)
  This Microsoft Excel-based cost-comparison calculator tool is designed to help you quantify the direct economic benefits (or costs) of deploying and managing databases in the cloud. You can use the spreadsheet as a starting point for your analysis and can modify the default assumptions based on the unique aspects of your business to compare the annual cost of deploying databases on Amazon RDS with that of co-location or on-site options. The accompanying user guide provides a detailed explanation of how to best utilize the tool.

• The AWS Simple Monthly Calculator (html)
  The updated AWS Simple Monthly Calculator incorporates all our services across all regions to help you estimate your monthly AWS bill more efficiently. Using this tool, you can add, modify and remove services from your “bill” and it will recalculate your estimated monthly charges automatically. The calculator also shows common customer samples and their usage, such as Disaster Recovery and Backup or Web Application.

• How AWS Pricing Works Whitepaper (pdf)
  This whitepaper will help you understand how to effectively estimate the costs of running your specific project on AWS. It provides several examples that leverage the AWS Simple Monthly Calculator. For each example, this paper discusses its architecture, example usage of each service, cost breakdown for each service, and the total estimated monthly charge.

• The Economics of the AWS Cloud vs. Owned IT Infrastructure Whitepaper (pdf)
  This whitepaper helps you understand and compare the direct and indirect costs of Amazon Web Services vs. traditional IT infrastructure.

• High Performance Computing Cost Comparison (pdf) and Web Hosting with Occasional Usage Spikes Cost Comparison (pdf)
  These common use cases allow you to compare the cost of Amazon Web Services with the cost of traditional IT infrastructure alternatives. These examples use the Amazon EC2 Cost Comparison Calculator to illustrate the economic benefits of cloud computing.