Cost Optimization

# Cloud Cost Optimization

Strategies and patterns for optimizing cloud costs across AWS, Azure, and GCP.

Do not use this skill when

- The task is unrelated to cloud cost optimization

- You need a different domain or tool outside this scope

Instructions

- Clarify goals, constraints, and required inputs.

- Apply relevant best practices and validate outcomes.

- Provide actionable steps and verification.

- If detailed examples are required, open `resources/implementation-playbook.md`.

Purpose

Implement systematic cost optimization strategies to reduce cloud spending while maintaining performance and reliability.

Use this skill when

- Reduce cloud spending

- Right-size resources

- Implement cost governance

- Optimize multi-cloud costs

- Meet budget constraints

Cost Optimization Framework

1. Visibility

- Implement cost allocation tags

- Use cloud cost management tools

- Set up budget alerts

- Create cost dashboards

2. Right-Sizing

- Analyze resource utilization

- Downsize over-provisioned resources

- Use auto-scaling

- Remove idle resources

3. Pricing Models

- Use reserved capacity

- Leverage spot/preemptible instances

- Implement savings plans

- Use committed use discounts

4. Architecture Optimization

- Use managed services

- Implement caching

- Optimize data transfer

- Use lifecycle policies

AWS Cost Optimization

Reserved Instances

Savings: 30-72% vs On-Demand
Term: 1 or 3 years
Payment: All/Partial/No upfront
Flexibility: Standard or Convertible

Savings Plans

Compute Savings Plans: 66% savings
EC2 Instance Savings Plans: 72% savings
Applies to: EC2, Fargate, Lambda
Flexible across: Instance families, regions, OS

Spot Instances

Savings: Up to 90% vs On-Demand
Best for: Batch jobs, CI/CD, stateless workloads
Risk: 2-minute interruption notice
Strategy: Mix with On-Demand for resilience

S3 Cost Optimization

resource "aws_s3_bucket_lifecycle_configuration" "example" {
  bucket = aws_s3_bucket.example.id

  rule {
    id     = "transition-to-ia"
    status = "Enabled"

    transition {
      days          = 30
      storage_class = "STANDARD_IA"
    }

    transition {
      days          = 90
      storage_class = "GLACIER"
    }

    expiration {
      days = 365
    }
  }
}

Azure Cost Optimization

Reserved VM Instances

- 1 or 3 year terms

- Up to 72% savings

- Flexible sizing

- Exchangeable

Azure Hybrid Benefit

- Use existing Windows Server licenses

- Up to 80% savings with RI

- Available for Windows and SQL Server

Azure Advisor Recommendations

- Right-size VMs

- Delete unused resources

- Use reserved capacity

- Optimize storage

GCP Cost Optimization

Committed Use Discounts

- 1 or 3 year commitment

- Up to 57% savings

- Applies to vCPUs and memory

- Resource-based or spend-based

Sustained Use Discounts

- Automatic discounts

- Up to 30% for running instances

- No commitment required

- Applies to Compute Engine, GKE

Preemptible VMs

- Up to 80% savings

- 24-hour maximum runtime

- Best for batch workloads

Tagging Strategy

AWS Tagging

locals {
  common_tags = {
    Environment = "production"
    Project     = "my-project"
    CostCenter  = "engineering"
    Owner       = "team@example.com"
    ManagedBy   = "terraform"
  }
}

resource "aws_instance" "example" {
  ami           = "ami-12345678"
  instance_type = "t3.medium"

  tags = merge(
    local.common_tags,
    {
      Name = "web-server"
    }
  )
}

**Reference:** See `references/tagging-standards.md`

Cost Monitoring

Budget Alerts

# AWS Budget
resource "aws_budgets_budget" "monthly" {
  name              = "monthly-budget"
  budget_type       = "COST"
  limit_amount      = "1000"
  limit_unit        = "USD"
  time_period_start = "2024-01-01_00:00"
  time_unit         = "MONTHLY"

  notification {
    comparison_operator        = "GREATER_THAN"
    threshold                  = 80
    threshold_type