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Rate Optimization

Introduction

Remember the cloud bill is formulated by cost = usage * rate. The two methods of reducing the cloud bill are reducing usage and reducing the rate you pay. Rate optimization is the process of getting a better rate for the same resource. Unlike usage optimization rate optimization often comes with a commitment to the cloud service provider. Committing to use/spend a set amount over a particular term—often 12-36 months—enables the cloud service provider to provide a lower rate for the same usage.

Successful rate optimization requires a deep level of understanding cloud billing and is often best analyzed over your entire cloud bill not on a team-by-team level. This is why one of the FinOps principles is for “A centralized team drives FinOps“ in which rate optimization is managed.

Contributing Functions

Maturity Examples

How to get started and what great looks like.

  • Crawl = Reservation coverage and utilization tracked
  • Walk = All commercial agreements tracked and reported.
  • Run = Metrics-driven cost optimization.

Common KPIs

  • Reservation coverage
  • Reservation utilization
  • Overall Savings per hour/month/quarter/year
  • Potential savings unrealized
  • Willing to add your story - Contibute stories here or reach out in the FinOps Foundation Slack