cost-optimization

name	cost-optimization
description	Cloud cost optimization and FinOps practices. Use when analyzing cloud costs, implementing savings strategies, or optimizing resource usage.

Cloud Cost Optimization

FinOps practices for managing and optimizing cloud spending.

When to Use

• Analyzing and reducing cloud costs
• Implementing cost allocation and tagging
• Right-sizing resources
• Choosing commitment options
• Setting up cost alerts and budgets

Cost Optimization Framework

The Three Pillars

Pillar	Actions
See	Tagging, allocation, visibility
Save	Right-sizing, commitments, spot
Plan	Forecasting, budgeting, governance

Tagging Strategy

Required Tags

locals {
  required_tags = {
    Environment = var.environment
    Project     = var.project
    Owner       = var.owner
    CostCenter  = var.cost_center
    ManagedBy   = "terraform"
    Application = var.application
  }
}

resource "aws_instance" "example" {
  # ...
  tags = merge(local.required_tags, {
    Name = "${var.project}-web"
    Role = "webserver"
  })
}

Tag Policy (AWS)

{
  "tags": {
    "Environment": {
      "tag_key": { "@@assign": "Environment" },
      "tag_value": {
        "@@assign": ["production", "staging", "development"]
      },
      "enforced_for": {
        "@@assign": ["ec2:instance", "rds:db", "s3:bucket"]
      }
    },
    "CostCenter": {
      "tag_key": { "@@assign": "CostCenter" },
      "enforced_for": {
        "@@assign": ["*"]
      }
    }
  }
}

Right-Sizing

Identify Over-Provisioned Resources

-- AWS Cost Explorer query
SELECT
  line_item_resource_id,
  product_instance_type,
  AVG(line_item_usage_amount) as avg_usage,
  MAX(line_item_usage_amount) as max_usage
FROM cost_and_usage_report
WHERE line_item_product_code = 'AmazonEC2'
GROUP BY 1, 2
HAVING avg_usage < max_usage * 0.3  -- Under 30% utilized

Right-Sizing Recommendations

Current	Recommendation	Savings
m5.xlarge (4 vCPU, 16GB)	m5.large (2 vCPU, 8GB)	~50%
r5.2xlarge (8 vCPU, 64GB)	r5.xlarge (4 vCPU, 32GB)	~50%
Provisioned IOPS SSD	General Purpose SSD	~60%

Terraform Right-Sizing

variable "instance_sizes" {
  type = map(string)
  default = {
    development = "t3.small"
    staging     = "t3.medium"
    production  = "m5.large"
  }
}

resource "aws_instance" "app" {
  instance_type = var.instance_sizes[var.environment]
}

Commitment Discounts

Comparison

Type	Discount	Flexibility	Best For
On-Demand	0%	Full	Variable workloads
Reserved (1yr)	30-40%	Low	Steady-state
Reserved (3yr)	50-60%	Low	Predictable long-term
Savings Plans	20-30%	Medium	Flexible compute
Spot/Preemptible	60-90%	None	Fault-tolerant

AWS Savings Plans

resource "aws_ce_savings_plan_purchase_recommendation" "compute" {
  lookback_period_in_days = "SIXTY_DAYS"
  payment_option          = "NO_UPFRONT"
  savings_plan_type       = "COMPUTE_SP"
  term_in_years           = "ONE_YEAR"
}

GCP Committed Use

resource "google_compute_resource_policy" "commitment" {
  name   = "commitment-policy"
  region = var.region

  instance_schedule_policy {
    vm_start_schedule {
      schedule = "0 9 * * MON-FRI"
    }
    vm_stop_schedule {
      schedule = "0 18 * * MON-FRI"
    }
  }
}

Spot/Preemptible Instances

AWS Spot Instances

resource "aws_spot_fleet_request" "workers" {
  iam_fleet_role  = aws_iam_role.spot_fleet.arn
  target_capacity = 10

  launch_specification {
    instance_type     = "m5.large"
    ami               = data.aws_ami.amazon_linux.id
    spot_price        = "0.05"

    tags = {
      Name = "spot-worker"
    }
  }

  launch_specification {
    instance_type     = "m5.xlarge"
    ami               = data.aws_ami.amazon_linux.id
    spot_price        = "0.10"
  }

  # Diversify across instance types
  allocation_strategy = "diversified"
}

GCP Preemptible VMs

resource "google_compute_instance" "worker" {
  name         = "worker"
  machine_type = "e2-standard-4"

  scheduling {
    preemptible         = true
    automatic_restart   = false
    on_host_maintenance = "TERMINATE"
  }
}

Kubernetes Spot Nodes

# EKS Node Group with Spot
apiVersion: eksctl.io/v1alpha5
kind: ClusterConfig
metadata:
  name: my-cluster
  region: us-east-1

managedNodeGroups:
  - name: spot-workers
    instanceTypes: ["m5.large", "m5.xlarge", "m4.large"]
    spot: true
    minSize: 2
    maxSize: 20
    labels:
      lifecycle: spot
    taints:
      - key: lifecycle
        value: spot
        effect: NoSchedule

Storage Optimization

S3 Lifecycle Policies

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

  rule {
    id     = "archive"
    status = "Enabled"

    transition {
      days          = 30
      storage_class = "STANDARD_IA"  # 45% cheaper
    }

    transition {
      days          = 90
      storage_class = "GLACIER"  # 68% cheaper
    }

    transition {
      days          = 180
      storage_class = "DEEP_ARCHIVE"  # 95% cheaper
    }

    expiration {
      days = 365
    }
  }
}

EBS Optimization

# Use gp3 instead of gp2 (20% cheaper, better performance)
resource "aws_ebs_volume" "data" {
  availability_zone = var.az
  size              = 100
  type              = "gp3"
  iops              = 3000   # Baseline included
  throughput        = 125    # Baseline included
}

Budget Alerts

AWS Budget

resource "aws_budgets_budget" "monthly" {
  name         = "${var.project}-monthly"
  budget_type  = "COST"
  limit_amount = "1000"
  limit_unit   = "USD"
  time_unit    = "MONTHLY"

  cost_filter {
    name   = "TagKeyValue"
    values = ["user:Project$${var.project}"]
  }

  notification {
    comparison_operator        = "GREATER_THAN"
    threshold                  = 80
    threshold_type             = "PERCENTAGE"
    notification_type          = "FORECASTED"
    subscriber_email_addresses = [var.alert_email]
  }

  notification {
    comparison_operator        = "GREATER_THAN"
    threshold                  = 100
    threshold_type             = "PERCENTAGE"
    notification_type          = "ACTUAL"
    subscriber_email_addresses = [var.alert_email]
  }
}

GCP Budget

resource "google_billing_budget" "project" {
  billing_account = var.billing_account
  display_name    = "${var.project} Budget"

  budget_filter {
    projects = ["projects/${var.project}"]
  }

  amount {
    specified_amount {
      currency_code = "USD"
      units         = "1000"
    }
  }

  threshold_rules {
    threshold_percent = 0.5
  }

  threshold_rules {
    threshold_percent = 0.8
  }

  threshold_rules {
    threshold_percent = 1.0
    spend_basis       = "FORECASTED_SPEND"
  }

  all_updates_rule {
    pubsub_topic = google_pubsub_topic.budget.id
  }
}

Cost Analysis Queries

AWS Athena (Cost and Usage Report)

-- Daily cost by service
SELECT
  DATE(line_item_usage_start_date) as date,
  line_item_product_code as service,
  SUM(line_item_unblended_cost) as cost
FROM cost_report
WHERE MONTH(line_item_usage_start_date) = MONTH(CURRENT_DATE)
GROUP BY 1, 2
ORDER BY 1, 3 DESC;

-- Cost by tag
SELECT
  resource_tags_user_project as project,
  SUM(line_item_unblended_cost) as cost
FROM cost_report
WHERE MONTH(line_item_usage_start_date) = MONTH(CURRENT_DATE)
GROUP BY 1
ORDER BY 2 DESC;

Quick Wins

Action	Effort	Savings
Delete unused resources	Low	5-15%
Right-size instances	Medium	20-40%
Use spot/preemptible	Medium	60-90%
Reserved/Savings Plans	Low	30-60%
S3 lifecycle policies	Low	40-90%
Schedule dev environments	Low	65%

Checklist

• Consistent tagging implemented
• Cost allocation reports enabled
• Budgets and alerts configured
• Unused resources identified
• Right-sizing analyzed
• Commitment options evaluated
• Storage tiering configured
• Dev environments scheduled

Integration

Works with:

• /aws, /gcp, /azure - Cloud cost analysis
• /terraform - Cost-aware infrastructure
• /devops - Cost in CI/CD