The biggest cost of Product and Engineering, other than Headcount is usually the AWS hosting charges. I am jotting down my understanding of AWS hosting charges from a finance perspective.
AWS offers around 70 services but the primary cost is mostly associated with Simple Storage (S3) and Elastic Compute Cloud (EC2). AWS pricing is similar to the utility bill. You pay for what you consume and can disconnect anytime. There is however, a twist. The utility bill has a step-up function i.e. if you exceed a certain usage your pricing goes up. AWS has a step-down function i.e. if you exceed a certain usage your pricing goes down.
Let’s talk about the two main headers, S3 and EC2.
Amazon Simple Storage Service (S3)
Cloud Storage pricing is here . S3 consists of the following major headers.
There are three different tiers for Storage; Standard Storage, Standard - Infrequent Access Storage and Glacier Storage.
Standard storage is used for your production data that is frequently accessed. This is the most expensive of the storage tiers. Strategically place it in different regions for better accessibility.
Standard - Infrequent Access Storage is as the name suggests for infrequently accessed data. This is cheaper than Standard Storage but has higher charges for data transfer.
Glacier Storage is cold storage to store data for regulatory or compliance purposes. Data can be retrieved if needed to the other two tiers for accessibility.
Request Pricing (Accessing Data from Storage)
There are different pricing ranges for accessing data from the above storage types.
Data transfers into S3 and to EC2 in the same region is 0 but transfers from S3 to internet and to EC2 in a different region costs you.
Amazon S3 Transfer Acceleration
S3 Transfer Acceleration is used if you need faster “Data transfer” (see above). AWS checks if it can move the data faster than “Data Transfer” and will charge extra only for accelerated data transfer.
AWS GovCloud Region
GovCloud is for Government agencies and contractors for compliance and regulatory purposes.
Amazon Elastic Compute Cloud (EC2)
EC2 pricing Is here.
EC2 is a virtual server for running applications on the AWS server. Think about it as memory needed to run the applications.
There are 4 types of EC2 instances sorted from cheapest to the most expensive; Dedicated Hosts, Reserved instances, Spot instances and On-demand instances.
Every time you use EC2 you will need EBS. EBS is like a virtual hard drive attached to your EC2 instance. It is so as to segregate compute from your data storage.
EBS pricing is here
There are other small charges other than EC2 and S3 but mostly minimal.
With this understanding an FP&A professional can intelligently forecast the AWS hosting charges with inputs from Product and Engineering.