Design Cost-Optimized Architectures

Key Concepts

• Cost optimization is about paying only for what you use, right-sizing resources, and choosing the right pricing model
• EC2 Pricing Models:
• On-Demand – pay per hour/second, no commitment, most expensive
• Reserved Instances (RI) – 1 or 3-year commitment, up to 72% savings; Standard RI (can't change instance type) vs. Convertible RI (can change)
• Savings Plans – flexible alternative to RIs; Compute Savings Plans apply across EC2, Fargate, Lambda
• Spot Instances – up to 90% savings; can be interrupted; ideal for fault-tolerant, stateless, batch workloads
• Dedicated Hosts – physical server; used for licensing compliance (e.g., per-socket/per-core software)
• S3 Storage Classes (cheapest to most available):
• S3 Standard → S3 Intelligent-Tiering → S3 Standard-IA → S3 One Zone-IA → S3 Glacier Instant → S3 Glacier Flexible → S3 Glacier Deep Archive
• Use S3 Lifecycle Policies to auto-transition objects between tiers
• Data Transfer Costs:
• Inbound to AWS = free
• Outbound to internet = charged
• Transfer between AZs = charged (small)
• Transfer within same AZ = free
• Use VPC Endpoints to avoid NAT Gateway data processing costs
• Auto Scaling – ensures you don't over-provision; scale in during off-peak hours
• Right-sizing – use CloudWatch metrics + AWS Compute Optimizer to identify over-provisioned resources
• Managed Services – RDS, ECS, Lambda reduce operational overhead and often reduce cost vs. self-managed EC2
• Serverless (Lambda, Fargate, DynamoDB on-demand) – pay only per invocation/request; great for spiky or unpredictable workloads
• CloudFront – reduces S3 egress costs and origin load by caching at edge
• AWS Cost Tools: Cost Explorer, AWS Budgets, Trusted Advisor (cost checks), Cost & Usage Report (most detailed)

How It Works

• Spot Instance Interruption: AWS gives a 2-minute warning before reclaiming; use Spot with Auto Scaling groups or Spot Fleet for resilience
• Reserved Instance Flexibility: RIs apply to any instance in the same region (if regional) or same AZ (if zonal); Convertible RIs can be exchanged; Standard RIs can be sold on the RI Marketplace
• S3 Intelligent-Tiering: Automatically moves objects between frequent and infrequent access tiers based on access patterns — no retrieval fee, small monitoring fee per object
• Savings Plans vs. RIs: Savings Plans are commitment-based ($/hour spend), not capacity reservations — more flexible but no capacity guarantee

Key Values

Exam Gotchas

1. Spot ≠ always the cheapest answer — if the question mentions the workload *cannot be interrupted