The AWS Economics Center provides access to information, tools, and resources to compare the costs of Amazon Web Services with IT infrastructure alternatives. Our goal is to help developers and business leaders quantify the economic benefits (and costs) of cloud computing.
Amazon Web Services (AWS) provides customers of all sizes with on-demand access to a wide range of Cloud infrastructure services, charging you only for the resources you actually use. AWS enables you to eliminate the need for costly hardware and the administrative pain that goes along with owning and operating it. AWS can reduce costs and improve cash flow, whether you are starting out or operating on a large scale. The information below will help you in your efforts to understand the economics for adopting AWS services as part of your IT strategy.
In addition to the economic benefits of Cloud Computing, AWS can also offer customers significant operational advantages, like setting up your infrastructure in minutes rather than months, completing massive computational projects with a large number of resources quickly, and scaling your architecture up and down to provide the IT resources you need, only when you need them.
|Learn how customers reduced
TCO by an average of 70%
|Learn architectural best practices
for reducing costs with AWS
|Calculate the potential savings for your project|
|Download the IDC Report
Download the VMS Report
|Download the TCO of Web Apps Whitepaper
Download the TCO of NoSQL Database Service Whitepaper
|Use the TCO Comparison Calculator
Use the AWS Simple Monthly Calculator
How AWS Pricing Works
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.
“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 GroupRead the case study
"We've saved already tens of millions of dollars in the small initiatives that we've done. And we're looking forward to saving hundreds of millions of dollars buying specified services on demand." Michael Harte, CIO, Commonwealth BankRead the story
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 31 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, 2012Read 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, 2012Read 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, 2012Read the article
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, foursquareRead 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
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.
“IDC observed significantly increased developer productivity. Developer and IT staff productivity accounted for nearly 30% of overall financial benefits. IT staff are now 52% more productive, saving nearly $150,000 per application per year. IT staff are thus able to improve support of mission-critical operations.” – IDC, July 2012Read the IDC white paper
“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, RazorfishRead the case study
“Zero software costs, minimal staff costs, low barrier to development, responsiveness and reliability.” Jay Ridgeway, Chief Architect, ShareThisRead the case study
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:
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 LaboratoryWatch the video
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 prohibitively 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:
For more information on architecting high availability applications, visit our Architecture Center.
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:
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.
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 Web Applications in the Cloud (pdf) - New!||Do you know the true cost of running your web applications on your existing infrastructure? This whitepaper will help you understand the different cost factors involved when you deploy and manage a scalable web application in an on-premises environment and compare the total cost to a variety of different AWS purchasing options. Through three example scenarios (Steady-state, Spiky but predictable, Uncertain and unpredictable), the paper provides detailed analysis on how to think about TCO in the cloud. Our analysis shows that AWS offers significant cost savings (up to 80%) over the equivalent on-premises option in each scenario.|
|The Total Cost of (Non) Ownership of a NoSQL Database Service (pdf)||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.|
|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)||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.|
|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.|
|IDC: The Business Value of AWS Accelerates Over Time (pdf)||IDC set out to understand the long-term economic implications of moving workloads onto Amazon cloud infrastructure services, the impact of moving applications on developer productivity and business agility, and the new opportunities that businesses could address by moving resources onto AWS. IDC discovered that the five-year total cost of ownership (TCO) of developing, deploying, and managing critical applications in AWS delivered a 70% savings when compared with deploying the same resources on-premise or in hosted environments. The findings also showed a 626% ROI over five years.|
|Forrester Research: File Storage Costs Less In The Cloud Than In-House (pdf)||
There’s a great deal of hype surrounding cloud delivery models of all flavors, with the assumption that it will usher in a new era of cheaper, better IT. But most I&O organizations struggle to compare the capital, operational, and staffing cost differences between internal and cloud storage.
This document will break down the cost differences by modeling a common workload — file storage — built and deployed traditionally versus consumed through the public cloud. Forrester’s models reveal a significant cost difference, with the cloud-based model coming in 74% less expensive than Infrastructure & Operations running it in-house.
|TCO Study on Running SAP on AWS (pdf)||SAP TCO Analysis conducted by AWS partner VMS, a Germany-based management consultancy, of ex-SAP execs, who have done financial benchmarks on over 2,600 SAP systems discovered that AWS customer can save up to 69% of their infrastructure spend by running SAP on AWS vs. on-premises or co-location facilities.|
|69% and Falling: Lowering the TCO of Enterprise Apps - New!||In this AWS re: Invent presentation, Ralph Treitz from enterprise consulting legend, VMS AG, dives deep into a detailed cost analysis of running SAP on AWS using best practices from more than 2600 environments. Learn more about understanding the components of TCO models for enterprise software (including SAP). Visit our YouTube Channel: http://www.youtube.com/user/amazonwebservices.|
How Much Can You Save with the Cloud?
|There isn't an IT department out there that isn't under pressure to reduce costs. For thousands of enterprises, the AWS cloud has become part of that lower cost strategy. But how much could you really save with AWS? In this AWS re: Invent session, we are joined by Kris Bliesner, chief executive officer of 2nd Watch, who have successfully helped over one hundred organizations reduce their IT costs. We are also joined by Vladimir Mitevski, Vice President Product Management Core Services at Thomson Reuters who will walk through by line item how and where their actual operating and capital expenses changed when they migrated to the cloud. Visit our YouTube Channel: http://www.youtube.com/user/amazonwebservices.|
|Top Venture Capitalists Discuss Investing in the App and Cloud Economy - New!||Amazon EC2 provides you several pricing options that can help you significantly reduce your overall AWS bill, including On-Demand Instances, Spot Instances, Reserved Instances, and the Reserved Instance Marketplace. This AWS re: Invent session covers high-level architectures and when to use and not to use each of the pricing models for components of those architectures. We walk through several customer examples to illustrate when to use each pricing option. Additionally, we walk through tools that may be useful to determine when to use each pricing model. Visit our YouTube Channel: http://www.youtube.com/user/amazonwebservices.|
|Using Spot Instances with EMR||This video explains how to reduce the cost of running Amazon Elastic MapReduce job flows using Spot Instances. For additional information, go to Lowering Costs with Spot Instances in the Amazon Elastic MapReduce Developer's Guide.|
|AWS Cloud Storage NY 2012: Total Cost of Ownership||AWS Technology Evangelist Jinesh Varia discusses Total Cost of (Non) Ownership in The Cloud. Learn more: http://aws.amazon.com/economics/|
|AWS Summit NYC 2012: Optimizing Costs in the AWS Cloud||Jinesh Varia, AWS Evangelist, discusses optimizing for cost in the AWS Cloud. Many organizations are attracted to Amazon Web Services because of the "pay as you go" cost model. Did you know that there is a robust selection of additional plans that allow businesses to save even more money? In this session you will learn about those plans, and how they not only lower costs but also provide certainty about your end-of-month charges. Find out more at http://aws.amazon.com/economics/|
|AWS Summit NYC 2012: AWS Cloud vs Data Center - A Cost Comparison||Join Jinesh Varia, AWS Technology Evangelist, as he discusses the Total Cost of (non) Ownership. Mr. Varia walks his audience through concepts of approaching TCO, patterns and best practices and also he reviews typical mistakes in thinking about On-Prem vs. Cloud. You'll learn what to take into account for an "apples to apples" TCO comparison, and you will also learn about the various components that allow AWS to provide low and precise bills based on very granular metering. Learn more: http://aws.amazon.com/what-is-aws/|
|Slides used in presentations||To view the slides used in our videos, webinars, and live events, visit our SlideShare.net channel: http://www.slideshare.net/AmazonWebServices|
|TCO Cost Comparison Calculator for Web Apps (html) - New!||Use this calculator to compare the cost of running your web applications on-premises to the costs with AWS. Adjust the simple sliders and radio buttons to describe your on-premises reference configuration to produce a simple cost comparison with AWS, or for a more detailed comparison use the "Configure" drop down menus.|
|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.|
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.|