Chapter 18 — Cost Management | Website Architecture & Deployment

Cloud bills can spiral out of control fast. Professional operations include cost awareness as a first-class concern.

Cloud Pricing Models

Model	How It Works	Best For	Savings vs On-Demand
On-Demand	Pay per hour/second of use	Variable workloads, testing	0% (baseline)
Reserved Instances	1-3 year commitment, fixed rate	Steady-state production	30-72%
Savings Plans	Commit to $/hr spend (flexible)	Predictable spend, flexible instances	20-50%
Spot/Preemptible	Bid on unused capacity (can be terminated)	Batch jobs, CI runners, stateless workers	60-90%

Model

How It Works

Best For

Savings vs On-Demand

On-Demand

Pay per hour/second of use

Variable workloads, testing

0% (baseline)

Reserved Instances

1-3 year commitment, fixed rate

Steady-state production

30-72%

Savings Plans

Commit to $/hr spend (flexible)

Predictable spend, flexible instances

20-50%

Spot/Preemptible

Bid on unused capacity (can be terminated)

Batch jobs, CI runners, stateless workers

60-90%

Cost Optimization Strategies

Right-sizing: Monitor actual CPU/memory usage. Most instances are over-provisioned. A t3.medium using 10% CPU should be a t3.small.

Auto-scaling: Scale down during off-hours. Many apps have 10x traffic difference between peak and trough.

Spot instances: Use for CI/CD runners, batch processing, and stateless workers. Save 60-90%.

Reserved capacity: For databases and always-on servers, commit for 1-3 years.

Storage tiering: Move old data to cheaper storage (S3 Glacier, cold storage).

Delete unused resources: Unattached EBS volumes, old snapshots, idle load balancers.

Use ARM instances: Graviton (AWS) / T2A (GCP) are 20% cheaper with same or better performance.

TCO Comparison: Self-Hosted vs Cloud

Factor	VPS ($40/mo)	AWS (equivalent)	Self-Hosted
Compute	$40/mo	$70-150/mo	$500 one-time + power
Database	Included (self-managed)	$30-100/mo (RDS)	Included
Bandwidth	Usually generous	$0.09/GB out (adds up!)	ISP cost
Your time	Medium (manage server)	Low (managed services)	High (manage everything)
Scaling	Manual (resize/add VPS)	Automatic	Buy more hardware
Reliability	99.9% SLA typical	99.99% possible	Depends on you

Factor

VPS ($40/mo)

AWS (equivalent)

Self-Hosted

Compute

$40/mo

$70-150/mo

$500 one-time + power

Database

Included (self-managed)

$30-100/mo (RDS)

Included

Bandwidth

Usually generous

$0.09/GB out (adds up!)

ISP cost

Your time

Medium (manage server)

Low (managed services)

High (manage everything)

Scaling

Manual (resize/add VPS)

Automatic

Buy more hardware

Reliability

99.9% SLA typical

99.99% possible

Depends on you

Billing Alerts

# AWS: Set up billing alarm via CLI aws cloudwatch put-metric-alarm \ --alarm-name "MonthlyBillingAlarm" \ --alarm-description "Alert when bill exceeds $100" \ --metric-name EstimatedCharges \ --namespace AWS/Billing \ --statistic Maximum \ --period 21600 \ --threshold 100 \ --comparison-operator GreaterThanThreshold \ --evaluation-periods 1 \ --alarm-actions arn:aws:sns:us-east-1:ACCOUNT:billing-alerts \ --dimensions Name=Currency,Value=USD # Also set alerts at 50%, 80%, 100% of budget # AWS Budgets is more powerful than CloudWatch for this

The hidden costs of cloud:
• Data transfer out: AWS charges $0.09/GB. A site serving 1TB/month = $90 just in bandwidth.
• NAT Gateway: $0.045/hr + $0.045/GB processed. Can easily be $30-100/mo.
• Load Balancer: $16-25/mo minimum even with zero traffic.
• Managed databases: 3-5x the cost of self-managed on a VPS.

Mitigation: Use Cloudflare (free CDN, absorbs bandwidth), minimize NAT Gateway usage, consider Hetzner/DO for predictable pricing.