Measuring Cloud Cost Efficiency with the New Cost efficiency metric by AWS

As organizations continue to scale their cloud infrastructure, the complexity of managing and optimizing cloud costs has grown. The elasticity of cloud computing offers unprecedented flexibility, and maximizing these benefits requires adopting optimization techniques such as rightsizing, resource cleanup, and commitment purchasing. Despite investing resources in cloud cost optimization, many organizations struggle to answer fundamental questions: How efficient are we being with our cloud spend? Which business units are most cost efficient? How do we demonstrate ROI on optimization efforts to leadership?

Today, we’re excited to introduce Cost efficiency in Cost Optimization Hub—a comprehensive, automatically generated measure of cloud spend efficiency that helps you track optimization progress over time and drive meaningful cost savings across your organization.

The Challenge of Measuring Cloud Cost Efficiency

Despite the critical importance of cloud cost optimization, most organizations struggle with three fundamental challenges:

1. Getting stakeholders to agree on the right way to track cost efficiency metrics often takes months or years. Engineering may prefer hardware utilization rates, finance wants ROI, product wants unit economics, and executives want simple business metrics. Without a standardized approach, FinOps teams risk spending more time building consensus than optimizing costs. As one customer shared: “It took us over a year after building our internal efficiency metric to get organizational buy-in.”
2. Even with measurement approaches in place, aligning teams around common goals remains challenging. When different teams track different metrics—one using CPU utilization, another using Reserved Instance coverage—fair comparisons become impossible. Without standardized metrics, it’s unclear what “good” looks like or which actions will materially improve efficiency. This makes it difficult to drive behavioral change across the organization.
3. Creating a single metric that encompasses rightsizing, idle cleanup, and commitment savings is mathematically complex. Individual metrics exist—like commitment coverage or idle resource percentage—but combining them effectively is difficult. Oftentimes, customers report that optimizing a single metric can hurt their overall optimization effectiveness. For example, focus on commitment coverage, and teams stop cleaning up idle resources since they’re already covered by committed spend. Focus on CPU utilization, and you miss memory- or network-constrained applications where low CPU is actually desirable. Teams face endless debates about calculation methodologies (before or after discounts, how to handle partial coverage), struggle with error-prone manual reconciliation across multiple data sources, and require ongoing engineering resources to maintain custom metrics as their environment evolves.

Why a Unified Cost Efficiency Metric Matters

These challenges—difficulty securing buy-in, problems with organizational alignment, and a focus on only one optimization approach—compound each other. Teams spend more time debating and building measurement systems than optimizing costs. FinOps practitioners find themselves in cycles of data collection, reconciliation, and explanation rather than driving meaningful savings.

What organizations need is a metric that:

1. Combines resource optimization and commitment optimization: Eliminates the need track these methods separately with metrics that compete (i.e., idle cleanup vs commitment coverage)
2. Provides a common language: Enables fair comparisons and alignment across all teams and business units
3. Calculates automatically: Removes the burden of manual data aggregation, reconciliation, and maintenance
4. Balances simplicity with comprehensiveness: Simple enough to explain to leadership yet comprehensive enough to be meaningful
5. Connects directly to action: There is a direct relationship from the score to the cost effectiveness of your cloud resources

This is what Cost efficiency delivers—a standardized, AWS-backed metric that solves the buy-in, alignment, and complexity challenges that have historically made cloud efficiency measurement so difficult.

Understanding Cost Efficiency

Getting Started

To use Cost efficiency, you must be opted in:

1. AWS Compute Optimizer: Provides rightsizing and idle resource recommendations
2. Cost Optimization Hub: Aggregates and deduplicates recommendations across services
3. Cost Explorer (recommended): Enables post-discount savings calculations for more accurate metrics

After opting-in, Cost efficiency appears on your Cost Optimization Hub homepage within 36 hours. You can see the summary view of cost efficiency by AWS account and AWS Region.

Cost efficiency provides a simple, yet comprehensive measure of your cloud spend efficiency using the following formula:

Cost efficiency = [1 - (Potential Savings / Total Optimizable Spend)] × 100%

The cost efficiency metric is based on a rolling 30-day spend and today’s savings opportunity. For example, the metric on November 30 will use the optimizable spend from October 31st to November 29th and the potential savings on November 30th.

Let’s break down each component:

Potential Savings

This represents all optimization opportunities identified by Cost Optimization Hub, including:

• Rightsizing recommendations: Downsizing over-provisioned EC2 instances, RDS databases, Autoscaling groups, and other resources
• Idle resource cleanup: Identifying and removing unused resources like unattached EBS volumes, idle load balancers, and RDS instances
• Commitment-based savings: Reserved Instance and Savings Plan recommendations across EC2, RDS, ElastiCache, and other services
• Migration opportunities: Moving to more cost-effective options like Graviton processors
• Storage optimization: Right-sizing EBS volumes and managing RDS storage

Importantly, all savings calculations consider your existing AWS discounts, including Reserved Instances and Savings Plans, providing the most realistic view of optimization potential.

Total Optimizable Spend

This represents your AWS spending on services where Cost Optimization Hub provides recommendations such as Amazon EC2 instances, Amazon RDS databases, and Amazon OpenSearch. It uses your Net amortized costs after removing any credits and refunds you might have. For more information, see Your net amortized costs. For supported services, the entire service spend is included in Total Optimizable Spend.

This approach balances simplicity with accuracy. While it may result in slightly higher efficiency scores for accounts that have more usage of services with partial coverage, it makes the metric easier to explain to leadership—a key requirement we heard consistently from customers—while maintaining metric stability as recommendations evolve.

Tracking Your Efficiency Over Time

When you first enable Cost efficiency, you’ll see 90 days of historical data. You have flexibility in how you view your efficiency trends:

• Daily view lets you see immediate results from optimization actions and catch efficiency drops quickly
• Monthly view reveals broader trends and helps you understand seasonal patterns in your infrastructure
• Custom ranges allow you to analyze specific periods, like a quarter or fiscal year

Supported Dimensions

Cost efficiency supports analysis across multiple dimensions:

• AWS Accounts (payer and linked accounts)
• AWS Regions

You can also interactively query through AWS Command Line Interface (AWS CLI) and AWS SDKs. See below for a sample usage that aggregates the result by account with a monthly granularity between July and September.

aws cost-optimization-hub list-efficiency-metrics \
  --group-by Account \
  --granularity Monthly \
  --order-by "{\"dimension\": \"Score\", \"order\": \"Asc\"}"
  --time-period start=2025-07,end=2025-09 \

Cost efficiency refreshes daily, comparing your last month’s actual AWS spend against today’s optimization opportunities. This approach gives you a current view of efficiency while accounting for your real spending patterns. Every 24 hours, the metric updates automatically—so when you implement a recommendation, you’ll see the efficiency metric change the next day.

Usage Patterns and Best Practices

Improving Cloud Cost Efficiency

1. Benchmarking: The Foundation of Efficiency Improvement

The most powerful capability of Cost efficiency is to use this data to set benchmarks within your organization and against industry standards. For the first time, you can answer questions like “How do we compare?” with data instead of guesswork.

Compare Teams Fairly Across Your Organization

Group your Cost efficiency by AWS accounts, and you instantly see how different business units stack up:

Cost efficiency for Marketing Team (Account: 12345): 78%
Cost efficiency for Engineering Team (Account: 67890): 65%
Cost efficiency for Data Science Team (Account: 11223): 82% 

This visibility has the following benefits:

• Identifies best practices: Learn from your highest-performing teams and spread those practices across the organization
• Focuses resources: Direct your optimization efforts where they’ll have the biggest impact
• Creates healthy competition: Teams naturally want to improve when they see their peers performing better
• Enables fair comparisons: Compare teams with a consistent metric that works across different workload types

2. Trend Analysis: Track Your Benchmark Progress

Once you’ve established where you stand, track how your efficiency evolves over time:

See Your Wins in Real Time

When your team implements optimization recommendations, you’ll see your efficiency score improve within 24-48 hours. This responsive feedback helps you understand what’s working and maintain momentum toward your benchmark goals.

Catch Problems Early

If your score drops from several points over two weeks, that’s your signal to investigate. Drill down by account to discover the root cause—maybe a new project launched with oversized resources. Fix it quickly before it becomes expensive.

3. ROI Measurement: Demonstrating Value to Leadership

One of the biggest challenges FinOps teams face is demonstrating the business value of optimization efforts. Cost efficiency makes it simple to show executives the business value of closing efficiency gaps. Each percentage increase of your cost efficiency score correlates to an exact dollar savings amount.

Quantifying Optimization Program ROI

Baseline (January):
- Efficiency: 60%
- Total Optimizable Spend: $2M/month
- Potential Savings: $800K/month

After 6 months of optimization (July):
- Efficiency: 82%
- Total Optimizable Spend: $2.3M/month  
- Potential Savings: $414K/month

Calculation:
- Realized savings: $800K - $414K = $386K/month
- Annual impact: $386K × 12 = $4.6M
- Note: Accounts for 15% spend growth from $2M to $2.3M

Presenting to Leadership

Transform your Cost efficiency data into executive-friendly narratives. See example below:

“Our FinOps team improved cloud efficiency from 60% to 82% over six months, realizing $4.6M in annual savings. This represents a 37% reduction in optimization opportunities despite 15% infrastructure growth—demonstrating that optimization efforts are outpacing our growth trajectory.”

Integration with Existing FinOps Practices

Cost efficiency is designed to complement, not replace, your existing FinOps metrics—making integration into your current dashboards straightforward. Using the ListEfficiencyMetrics API, you can programmatically pull efficiency data and incorporate it alongside your existing KPIs like commitment coverage, budget variance, and cost per transaction. The metric provides context for these individual indicators: if your RI coverage is high but your efficiency score is low, it signals that your commitments might not be right-sized. You can even integrate Cost efficiency into tools like Tableau, QuickSight, or PowerBI by calling the API directly. This creates a unified view where leadership can see both traditional cost metrics and the new efficiency benchmark in one place. The deep-link capability to Cost Explorer means users can click through from your dashboard directly to detailed spend analysis, maintaining the workflow your teams already know. Rather than building yet another standalone dashboard, you’re enhancing what you already have with a comprehensive efficiency view that ties all your optimization efforts together.

Conclusion

Cost efficiency in Cost Optimization Hub transforms how organizations measure and improve cloud cost efficiency:

1. Comprehensive View: Unlike fragmented metrics, it considers resource optimization, utilization, and commitment savings in a single score
2. Automatic Calculation: Eliminates manual data aggregation, reconciliation, and custom pipeline maintenance
3. Actionable Insights: Direct connection to specific Cost Optimization Hub recommendations enables immediate action
4. Historical Tracking: Up to 90 days of trend data demonstrates ROI and tracks progress over time
5. Cross-Organizational Comparability: Consistent methodology enables benchmarking across teams and business units
6. Behavioral Change Driver: Daily updates provide timely feedback loop that motivates continuous improvement
7. Leadership-Friendly: A simple, standardized metric makes it easy to communicate value to executives