AWS Costs & Billing
If you have ever been told by anyone, in this cruel and depressing world, “AWS is cheaper than datacenters”, and you’ve found yourself sitting there thinking “is it?!”. Please be assured that it’s not you; That person is either incompetent, or just a moron. I’m going to try my upmost to ignore all technology, architecture and all the stuff that your boss doesn’t really understand, and just explain why the mantra of “AWS is cheaper” nonsense.
To be clear, that is my only goal today. To convince you that AWS isn’t cheap. I’m not going to give you the pro’s and con’s of running in the cloud, or why one is better than the other. That’s a whole difference conversation that will get technical.
Disclaimer: We are ignoring the whole rearchitecture and scaling piece. I’ll post about that seperately. AWS probably also make some savings with their scale, but read on, and you’ll hopefully understand what hole AWS precisely fills.
What is Cloud?
Cloud with a capital C. There’s 3 things to remember when it comes to “the cloud”:
The cloud isn’t actually made of atomised water. It’s made of decenters audible gasp
It’s not designed for costs
It’s designed for value delivery
Wet Stuff
Cloud is simply you giving away responsibility for all of the really boring and time consuming side of running a datacenter, or having presence therein. That is all. The key thing to remember here is that the Cloud is a datacenter, and as such all of the costs of running a datacenter still exist.
With that said, this paradigm of “Someone Elses Problem” (SEP) is now pretty much inherent within the tech space. SaaS (software-as-a-service) products are becoming defacto, and that is slowly but surely seeping into every other aspect of what we do. You’ll see the acronym “aaS” appended onto literally everything. In fact there’s a whole wiki dedicated to this which specifically states “in the context of cloud computing”.
This concept of SEP is gradually abstracting away from the underlying components of everything we do… and that’s okay. It just brings a new set of challenges that we need to solve. It used to be a case of designing fault tolerant datacenters, with dual power feeds and N+1 servers, but now we worry about “availability zones” and “autoscaling” - these words are just abstractions from the underlying issue of DC reliabilty. In the words of AWS’s own CTO: “Everything fails all the time” - we still need to design to account for hardware failures.
If you’ve not got time to manage a logging stack, pay someone for it… Who cares. I’m only here to let you know that when you buy that product, all those problems of datacenter management and whatnot still exist - all you’re doing is paying someone else to worry about it.
Cloud Isn’t Designed to be Cheaper
As in the previous point, all the hardware, air conditioning, power, networking, etc is all still there… it all still costs money to run. There’s also the salaries for Networking Engineers, Datacenter Architects, all the physical engineers laying the fibres and the pipework, electronics, etc on top of all that. And all of this runs at a profit.
Those costs still exist and are passed onto you, the customer.
You can see why people would assume it’s cheap though. Lets take a very small AWS machine for example. You’ll pay $2 a month for it, or some other microscopic figure. As such, it might seem like AWS is silly cheap, and to be fair to them, some things are.
But lets just point out, you could buy a couple of raspberry pi’s with the same compute capabilities and you’ve only got to deal with the upfront cost. No monthly ongoing fees aside from power.
There are ways to manage AWS bills to keep costs managable, but fundamentally AWS are paying for all the things you’d be paying for. Lets be fair, Jeff isn’t going to fuel his superyacht by giving you all of this at a loss, and considering their $13B profit in 2020, it’s clear that they are certainly not doing so.
Lets look at some numbers for a minute:
1024GB of solide state drvie (SSD) storage costs $80 dollars a month, give or take.
Lets say you keep it for 1 year, that’ll cost $960.
Even if the drive needs replacing every year, and they’re running on top-of-the-range SSDs, thats still likely to equate to >$500 per year profit.
Cloud Is Designed to Make You Faster
The Cloud isn’t designed to cost less - it’s designed to be efficient. As discussed in the first point, paying someone else to worry about stuff so you don’t have to has value. It means that you can focus on delivering value.
If you’re a small start up, not having to worry about huge upfront capital expenses is amazing. The Cloud is a silver bullet in this scenario. You pay a fee of the tiny part of the AWS datacenter that you use, and don’t need to worry about the management of all the underlying components. You’re paying someone else to worry about that stuff, so you can focus on delivering value to customers.
That is where their value is… making you efficient. You pay a premium for this and that’s okay, as long as you’re under the understanding that this is how it works.
How this works in the real world
Lets take a well paid Exec for a rudimentary example:
They gets paid $200,000 a year to run a business.
They spend 1 hour of their 8 hour day managing their schedule and arranging meetings.
That 1 hour is costing the company $25,000 a year.
Would it not be wise to bring in an assistant on $25,000 and let the exec focus on running the business, i.e. optimising their time in delivering what they’re good at? It absolutely would be.
This isn’t even where it stops. If the guy commutes 1 hour each way from home… how much would a driver cost? We can get an extra 2 hours out of him if he’s working from the car whilst being driven home.
Paying someone else to do the stuff that optimises delivering value to your business or customers inherently has value in intself, but you need to remember that you’re going to be paying a premium to do so.
