Liquid Web Coursera, Netflix, Shopify, and Lamborghini: all are vastly different companies, brands, and products.
Yet, each of these heavy hitters and industry leaders have one thing in common.
They all use AWS hosting to ensure customers’ experiences and maintain their apps’ stability — without needing costly, clunky, and on-premises hardware.
In other words, they all “live in the cloud.”
But these big names come with big budgets — so what does that mean for AWS hosting costs?
The good news is that you’re unlikely to experience sticker shock, especially if your hosting needs aren’t as resource-intensive as Netflix or Shopify’s.
Instead, there are a couple of flexible and lightweight pricing options available for businesses that are still scaling but could benefit from the longevity and maturity of AWS hosting without the hefty price tag. And once you know the factors differentiating one tier from the next, you can trade up when you’re ready.
In this article, we’ll discuss AWS hosting costs, the available pricing models, the factors affecting these options, and some key strategies for optimizing AWS expenses so your IT operating costs don’t exceed your revenue.
6 AWS pricing models
Amazon Web Services (AWS) offers various pricing models to support a wide range of business sizes and types, covering general needs and usage patterns.
Understanding these models helps optimize costs and maximize the value of AWS services. Below are some terms Amazon uses to describe AWS pricing.
Model #1: Pay-as-you-go
With AWS, your costs are calculated based on the exact services you use, much like paying for utilities. This keeps you firmly in control of the expenses because all you pay for is what you use.
It also eliminates the risk of being charged for unused features and includes the essentials any business needs for hosting.
Model #2: Free tier
This unpaid plan is offered to all new AWS users so they can learn how AWS works before they start paying for it.
The free tier offers limited access to some AWS services and can either be introductory (lasts for 12 months) or non-expiring (lasts more than 12 months), depending on the AWS service(s) you are trying to use.
Model #3: Reserved
Reserved Instances (RIs) offer substantial discounts (sometimes up to 72 percent of the initial costs) to customers who commit to using specific EC2 instances for either a 1-year or 3-year term.
Although the long-term commitment could feel slightly more constricting, it allows businesses to lock in payment terms at lower rates than on-demand pricing.
This pricing model suits businesses with stable workloads or long-term projects with precise resource needs.
On-demand
On-demand AWS pricing involves paying for instances at a particular rate per hour or minute. As your usage scales up or down between one hour or minute and the next, your costs (but not your rate) increase or decrease accordingly.
On-demand pricing differs from pay-as-you-go in that on-demand is only available for a select number of AWS services. In contrast, pay-as-you-go is an umbrella term Amazon uses to describe its policy for pricing AWS.
Spot instance
Spot instances are like a first-come-first-served bonus. Amazon sells unused EC2 capacity at discounted prices. This model benefits workloads with flexible start and end times, applications that tolerate interruptions, and batch-processing jobs or background tasks.
Savings plan
This plan allows you to save up to 72 percent of on-demand costs with the condition that you commit to a one or three-year hourly spend. AWS savings plan only exists for three services: Amazon SageMaker, EC2 Instance, and Compute.
This model suits organizations with varied workloads, cost-conscious businesses, and IT setups needing flexible instance options.
AWS services costs
Are you curious about what you’ll pay for the specific AWS service you need? Here’s a breakdown of the costs for five common AWS services.
AWS Amplify
Your AWS Amplify costs are calculated by adding your Build & Deploy and Hosting charges together.
Build and Deploy charges
The free tier gives you 1000 minutes per month; after that, you pay $0.01 per minute.
Hosting charges
You pay for both data served and data storage. The free tier offers 15GB of data served and 5GB of data storage per month. After that, you pay $0.15 per GB of data served and $0.023 per GB of data storage.
Amazon S3
Amazon’s Simple Storage Service (Amazon S3) has a free tier that offers 5GB of Amazon S3 standard tier storage. If your usage exceeds this, you’ll be charged based on your storage tier and request type (cost per 1000 requests). Prices start at $0.023 per GB per month for standard storage.
You will also pay extra if you transfer data from AWS S3 or sign up for management and analytics.
AWS Databases
AWS offers 15 databases to choose from, and pricing differs for each. Some of these include Relational Database Service (RDS), DynamoDB, and Aurora.
RDS, the most common AWS database, has a free tier that offers 750 hours of RDS usage per month, 20GB of general-purpose data storage, and 20GB of DB snapshot storage. If you exceed this, your costs are calculated using on-demand or reserved pricing.
Amazon Elastic Compute Cloud
Amazon Elastic Compute Cloud (EC2) usage is priced per second or hourly using five pricing models: on-demand, reserved, savings plans, spot pricing, and dedicated hosts.
The default pricing model is on-demand, and the final price depends on your location, operating system, and instance type and size.
Amazon LightSail
Amazon LightSail has a free tier that offers 750 hours of usage of a Unix or Windows instance, 1TB of data transfer, and 5 GB of Lightsail object storage.
LightSail offers different pricing levels outside the free tier, starting at $5 monthly for 0.5GB of memory, two vCPUs, a 20GB SSD disk, and 1TB of transfer. Higher-tier offerings can be as high as $574 per month.
Factors influencing AWS hosting costs
Understanding the factors impacting AWS hosting costs is essential for budget management and optimization. Your total AWS hosting costs depend on factors including the following.
Services used
AWS services’ pricing structures and usage metrics shape your total costs. For instance, EC2 charges by compute time, and S3 costs depend on storage and data transfer.
Tiered services like these can reduce expenses with higher usage, but adding more services or increasing non-tiered usage raises costs. Careful selection and configuration based on needs can help control expenses.
Pricing model/subscription
AWS offers On-Demand, Reserved Instances, and Spot Instances pricing models. Choosing the suitable model can save substantial money.
For example, consistent EC2 usage could save up to 72 percent with reserved pricing compared to On-Demand rates. But, If your usage fluctuates, reserved pricing might lead to wasted resources that don’t roll over.
Location of data center
AWS hosting costs differ by location because of differences in the costs of setting up data centers in different geographical areas. The pricing for AWS services also depends on demand across different localities, so more demand means a more expensive service.
To optimize your hosting costs, choose a strategic location that doesn’t sacrifice performance.
Needed support
The level of AWS support you need affects your overall costs. Independently managing your cloud setups is more cost-effective, while subscribing to additional services like analytics and management increases expenses. Carefully choose the appropriate support tier, as fees vary by tier.
5 strategies to optimize your AWS hosting costs
Effective cost management is essential when using AWS services. Here are key strategies to optimize your AWS hosting expenses.
1. Track the services you use
Accurate tracking is necessary to understand which AWS services you use and to what extent. Create tags for each service to identify, organize, and manage them.
Use AWS Cost Explorer to view total costs and how they align with each tagged service. This breakdown helps assess whether your usage justifies the associated costs.
2. Use the AWS hosting calculator
Know your exact services and usage hours, then use the AWS hosting calculator to estimate your costs. This helps with budgeting and identifying discrepancies if actual charges exceed estimates.
3. Use cost management tools to effectively budget AWS hosting expenses
Want to get even more accurate AWS cost estimates and eliminate waste, add cost management tools like AWS budgets, AWS Cost Explorer, and CloudCheckr. These tools assist with budgeting, tracking spending, and analyzing costs per service.
4. Implement auto-scaling to match capacity and demand
To ensure every dollar you pay is being spent, activate auto-scaling to adjust your cloud capacity based on demand. This ensures you’re not paying for idle resources during downtime and that performance meets expectations during peak demand.
5. Remove or stop unused resources regularly
Use tracking and cost management tools to monitor your AWS service usage. This will give you a comprehensive view of services used and how they’re being used. You can then discontinue subscriptions to unused services to maximize your budget.
AWS hosting alternatives
AWS might be a popular cloud hosting service, but it’s not the only one. Here are three AWS alternatives.
Liquid Web
Liquid Web is a hosting company with many services AWS offers but with 24/7/365 customer support, fixed transparent pricing, and complete infrastructure management.
With Liquid Web, you are guaranteed a cloud hosting service that offers seamless applications and cloud migration and operations, server management, and excellent customer support, all at a fraction of the cost of AWS and without you having to get a headache while figuring out what you’ll pay.
Google Cloud
Google Cloud is another popular enterprise cloud hosting service that offers services similar to AWS. However, unlike AWS, Google Cloud uses a subscription model. You pay a monthly or yearly fee to gain access to all GoogleCloud services and can use as much or as little as you want without extra fees.
But just like AWS, you are charged additionally for support and infrastructure management.
Microsoft Azure
Microsoft Azure offers a wide range of services similar to AWS. Like AWS, it offers 12 months of free access and uses a pay-as-you-go pricing model. However, Azure’s pricing runs per minute (compared to hourly for AWS) and works out to a lower price point.
Microsoft Azure also has the unique feature of working the best with Windows devices.
Slash your AWS hosting costs: Get started with Liquid Web
Understanding AWS hosting costs is essential for businesses aiming to maximize their cloud investments. With the right strategies, you can reduce expenses by analyzing pricing models and service costs while maintaining performance and scalability.
While AWS is a popular choice, many businesses turn to Liquid Web’s white-glove, mature, and high-value services as a cost-effective and performance-driven alternative to AWS.
With Liquid Web hosting supporting your most essential business needs, you can take advantage of done-for-you managed hosting and skip the complications that arise when trying to handle IT infrastructure yourself. Our superior customer support and cost-effective pricing model make us the consistent alternative to AWS.