Amazon ec2 costs can grow very fast if you are not mindful of the Amazon ec2 billing structure. We came across the following ways to save money at our company.

Keep machines in the same availability zone
Don’t scatter your machines that talk to each other across multiple availability zones. You will end up paying for the bandwidth. Off course this does not apply to the people who purposely keep their machines in different availibilty zones to ensure high availibility.

Use cnames instead of A records
In other words do not map your domain name to an elastic ip. Map it to the public domain name of the instance. Let’s say you have a machine with name All the web servers (within the same availability zone) send considerable data to this machine. If you setup as an A record, your data will go out and come back in. But if you map it as cname, your data will always remain within the ec2 cluster. To read more about this visit Eric Hammond’s Using Elastic IP to Identify Internal Instances on Amazon EC2 post.

Use spot instances
Use spot instances whenever possible. Spot instances cost less than on demand instances. You can read more about spot instances on Amazon’s web page. There is a website that shows spot history price graphs. It will tell you an average price of various types of instances. The average price of a m1.small sport instance is 3 cents an hour. You pay 8.5 cents an hour for the same type of on demand instance.

Choose your instance types wisely
A smallest possible instance may not be the right choice to save money. For example c1.medium costs twice as much as m1.small. But it offers 5 times more compute power than m1.small. Thus in some compute heavy jobs it might be cheaper to use c1.medium instead of the least expensive m1.small.

Choose the smallest possible storage
Choose the smallest possible EBS volumes and RDS instances. It is very easy to expand an ebs volume when needed. Same is the case with a RDS instance. Furthermore by choosing smaller drives, you will save money needed for the backup(snapshot) storage too.

Use Autoscaling
Autoscaling can start additional instances when needed. It can shut down the additional instances when the need disappears. This is especailly useful for hosting websites/web services that have a specific traffic/usage pattern.

Reserve your instances
You can reduce your costs significantly by reserving number of instances for a year or for three years. Reservation is only a billing concept and thus you don’t have to designate any istances as reserved. If you reserve 4 m1.small instances, Amazon will make 4 of your running m1.small instances as reserved. For more information visit Werner Vogels’s (Amazon CTO) blog.

There might be numerous other ways you can save money. Please feel free to leave a comment to share your ways. The more the merrier!

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