Billing and cost management: AWS Budgets, Cost Explorer, the Pricing Calculator, consolidated billing and cost allocation tags

Why this matters

Pay-as-you-go is the cloud’s great advantage and its great risk. Nobody signs a purchase order before an engineer launches a server, so spending can grow quietly until the invoice arrives. The tools in this lesson are how an organisation sees that coming: estimate before you build, watch what you spend, get warned before you overspend, and know which team spent it.

A finance manager needs to split one AWS bill across departments and projects. A project lead needs a cost estimate for a business case before a single resource exists. A salesperson is asked “how much will this cost us?” and needs the right tool to answer it. A junior engineer with a new personal account needs to be told the moment it starts costing money.

The exam asks you to match each of those needs to one tool. The tools overlap just enough to make the wrong answers plausible, so the skill is knowing what each one is for and, as importantly, what it is not for.

The lesson

Billing support and information

The AWS Billing and Cost Management console is where an account’s bills, invoices, payment methods, cost tools and billing preferences live. Most of the tools in this lesson open from there.

When a customer has a question about a charge, an invoice or their account, they open an account and billing case in the AWS Support Center. Every AWS customer can do this, including those on Basic Support, the free plan; no paid support plan is needed for billing help. The support plans themselves are covered in lesson 25.

Billing questions belong in a private case, not on a public forum. AWS re:Post is a community site, and posting an invoice there would expose account details.

Pricing information for AWS services

Before estimating anything, learn how a service is priced. Each AWS service has a public pricing page on the AWS website that lists the dimensions it charges for. For Amazon S3, for example, those are storage, requests, data retrieval and data transfer, as lesson 23 explains. Rates vary by Region and change over time, so the pricing page is the place to check the current figure.

Three ideas run through almost all AWS pricing: you pay as you go for what you use, you pay less when you commit to usage in advance (Reserved Instances and Savings Plans), and you often pay less per unit as your usage grows, through volume tiers. The AWS Free Tier lets customers try many services without charge within set limits; its terms are on the AWS Free Tier page. Programs that need prices can query the AWS Price List API instead of reading pages.

AWS Organizations

AWS Organizations lets a company centrally manage many AWS accounts. One account creates the organisation and becomes the management account; the others are member accounts, either created from the organisation or invited into it. Accounts can be grouped into organisational units (OUs), for example one per department or environment, and service control policies (SCPs) set the maximum permissions for the accounts in an OU. Organizations itself carries no additional charge.

Many companies use one account per team, product or environment, because an account is a strong boundary for security, quotas and cost. Organizations is what keeps that many accounts manageable, and it is what makes consolidated billing possible.

AWS cost allocation tags

A tag is a label made of a key and a value, such as Project = Apollo or Environment = Production, attached to an AWS resource. When tags are used for billing they are called cost allocation tags, and they let a company split costs by anything it chooses: project, team, cost centre, customer or environment.

The step people miss: a tag only appears in billing tools after it has been activated as a cost allocation tag in the Billing and Cost Management console. In an organisation, the management account does the activating. If resources already carry a Project tag but no project data shows in Cost Explorer, nothing needs re-creating; the tag needs activating.

Tags also solve a common problem without extra accounts. A startup with one account can tag its resources by environment, activate the tag, and see test and production costs separately.

AWS Budgets and AWS Cost Explorer: what each is for

These two are the most often confused. AWS Budgets watches and warns; AWS Cost Explorer looks and analyses.

AWS Budgets lets you set a target and be alerted, by email or through Amazon SNS, when actual or forecasted spend passes a threshold you choose. A budget can track:

• cost, for example monthly spend on one service, one account or one tag;
• usage, such as hours of a service;
• Reserved Instance utilisation and coverage;
• Savings Plans utilisation and coverage.

A zero-spend budget alerts you as soon as spending rises above zero, which is the simplest way for a new customer to learn that usage has gone beyond the Free Tier. Budgets actions go further than an alert: when a threshold is crossed, they can apply an IAM policy or a service control policy, or stop specific EC2 or RDS instances, either automatically or after someone approves.

AWS Cost Explorer is the analysis tool. It shows historical cost and usage as graphs and tables that you can filter and group by service, linked account, Region, tag and more. It forecasts likely spend over coming months from your own past usage, and it recommends Reserved Instance and Savings Plans purchases that would have lowered your bill, along with reports on how well existing reservations are used. You can save a view as a report to return to.

What neither does: Cost Explorer shows and forecasts costs but does not send alerts, and Budgets tracks spend and reservation use but does not recommend purchases. Budgets does not recommend smaller instance types for underused servers, and although Cost Explorer offers basic EC2 rightsizing recommendations, the dedicated rightsizing service is AWS Compute Optimizer, which analyses utilisation metrics, as lesson 5 explains.

AWS Pricing Calculator: estimating before you build

AWS Pricing Calculator estimates what a planned workload will cost before you create anything. You choose services, Regions and configurations, such as instance type, hours of use, storage and expected data transfer, and the calculator totals a monthly and yearly estimate. You can group services by application or team, compare alternative designs, and export an estimate or share it through a link, which suits a business case or a migration plan. The public calculator works without an AWS account.

The distinction to hold onto is time. The Pricing Calculator models the future from configuration you type in. Cost Explorer reports the past, and forecasts from that past, so it cannot help a company that has not yet run anything on AWS.

Consolidated billing and how costs are allocated

With consolidated billing, the organisation receives one bill, and the management account pays the charges of every member account. Member accounts do not pay AWS directly. The feature itself costs nothing extra.

Its benefits:

• One bill for many accounts, with each account’s charges still visible separately.
• Combined usage for volume pricing. Usage across all accounts is added together, so the organisation reaches lower-priced volume tiers sooner than any one account would.
• Shared discounts. Reserved Instance and Savings Plans discounts apply across accounts by default, as lesson 23 explains.

It does not upgrade anyone’s support plan, encrypt anything or raise service quotas.

Paying one bill does not mean losing sight of who spent what. To allocate costs back to the business, the finance team can group by linked account in Cost Explorer to see each member account’s share, set budgets for individual accounts, and use cost allocation tags to split costs further, for example by project across several accounts. Budgets cannot issue a separate invoice for each account; the single bill is the point of consolidation.

Types of cost allocation tag, and the Cost and Usage Report

There are two types of cost allocation tag:

• AWS-generated tags are created and applied by AWS. The example to remember is createdBy, which records which principal (user or role) created a resource. Their keys begin with aws:.
• User-defined tags are created and applied by the customer, such as Project or CostCentre. In billing reports their keys carry a user: prefix.

Both types must be activated before they appear in billing data.

Once active, tags show up in Cost Explorer as a grouping option and as columns in the AWS Cost and Usage Report (CUR). The CUR is the most detailed billing data AWS provides: individual line items for each resource and each usage type, down to hourly detail, including tags and Reserved Instance and Savings Plans information. It is delivered to an Amazon S3 bucket that you choose, where you can query it with Amazon Athena or load it into Amazon Redshift or Amazon Quick Sight. Choose it when a scenario wants the most granular data, a raw feed for its own analysis, or line items per resource. Cost Explorer reports summarise costs in the console but do not give that granular feed.

What the exam is really asking

Match the verb to the tool:

• Estimate before anything exists: AWS Pricing Calculator.
• Understand how a service is priced: that service’s pricing page.
• Alert on actual or forecasted spend, or act automatically when spend passes a threshold: AWS Budgets.
• Analyse past spend, forecast from it, group by account or tag, or get RI and Savings Plans recommendations: AWS Cost Explorer.
• Most detailed line-item data, in S3, for Athena: AWS Cost and Usage Reports.
• Split costs by project or environment: cost allocation tags, activated.
• One bill for many accounts, shared discounts, volume tiers: consolidated billing in AWS Organizations.
• A question about a charge: an account and billing case in AWS Support Center, on any plan.