FinOps in AWS: Best Tools and Practices for Cloud Cost Optimization

Cloud computing, with services like AWS, has revolutionized business operations with its scalability and flexibility. However, if resources are not managed well, cloud computing could become a financial nightmare, which has made FinOps—a practice for cloud cost optimization—a hot topic.

FinOps in AWS goes beyond budget tracking. In addition to providing insights to customers for optimized cloud spending, it is about maximizing business value while ensuring financial accountability.

According to Gartner, worldwide end-user spending on public cloud services was $595.7 billion in 2024. However, according to the 2024 State of the Cloud Report from Flexera, around 27% of this spending was wasted, which amounts to a staggering $160 billion.

Yet, studies show that with FinOps practices, cloud spending waste in IaaS and PaaS was on a downtrend after reaching a high of 32% in 2022.

What Is FinOps?

FinOps- an abbreviation for Financial Operations, is a practice of collaboration between finance, operations, and engineering teams to manage and optimize cloud spending. It’s all about spending your every dollar wisely on cloud services.

Like DevOps practices in software development, FinOps ensures efficiency by taking a more predictable, business-driven approach to cloud financial management.

According to Polaris Market Research, the cloud FinOps market ($3.47 billion in 2024) is expected to reach $39.56 billion by 2034, a CAGR of 11.4%.

Also Read: Learn how your organization keeps cloud costs under control.

AWS FinOps Toolkit: Best Tools for Cloud Cost Optimization

Businesses can use AWS native tools (free and paid versions) to implement an effective FinOps strategy in AWS and optimize spending on cloud services.

1. Cost Visibility and Reporting Tools

Lack of visibility or real-time cost tracking results in unexpected cost spikes for organizations. AWS cost visibility tools can help businesses understand spending patterns and optimize resource allocation.

1.1. AWS Cost Explorer

AWS Cost Explorer helps visualize cloud costs with easy-to-read charts that show cost changes, service expenses, and usage spikes.

It offers granular insights by filtering data by service, region, tags, and accounts. Using historical data, it forecasts spending trends and supports financial planning.

Is AWS Cost Explorer Free?

The free version offers basic usage options and up to 12 months of data. However, advanced features—such as detailed historical data beyond 12 months, hourly granularity, or additional cost allocation reports—may be subject to AWS pricing.

1.2. AWS Cost and Usage Reports (CUR)

It offers detailed cost and usage data at the service, resource, and region level, with hourly, daily, or monthly granularity. This makes it ideal for organizations with multiple AWS accounts, enabling precise departmental chargebacks.

AWS CUR stores reports in an Amazon S3 bucket in CSV format, allowing easy access and long-term storage. It also integrates with analytics tools like Athena, Redshift, and QuickSight for advanced querying and visualization.

Pricing Options:

AWS CUR is free to use, but data storage (S3) and analytics tools (Athena, Redshift) incur costs for data processing.

Learn more about it in the AWS CUR documentation.

2. Budgeting and Alerts Tools:

A defined budget limit and an automated alert for exceeding thresholds help to prevent overspending.

AWS services like AWS Budgets and AWS Cost Anomaly Detection can be used to track and notify users about unexpected cost spikes.

2.1. AWS Budgets

AWS Budgets lets users set cost thresholds and track spending against budget targets for different periods (monthly, quarterly, or annual).

Alerts can be configured to notify users via email or through Amazon Simple Notification Service (Amazon SNS).

Does AWS Budget Have A Free Plan?

AWS Budgets offers free and paid features, depending on the scale or features of your need. You can create unlimited budgets without associated actions at no cost.

But if you want action-enabled budgets (such as stopping instances when a budget is exceeded), you can create only two for free per month. After that, it will incur a $0.10 daily cost.

2.2. AWS Cost Anomaly Detection

This machine learning-powered tool helps you detect unusual patterns in your AWS spending.

It detects sudden cost spikes and sends proactive alerts, notifying teams of potential misconfigurations or excessive usage. With this early warning system, you can immediately prevent costs from escalating.

AWS Cost Anomaly Detection is a free service.

Read this documentation on Cost Anomaly Detection for more.

3. Cost Optimization and Commitment Models

Organizations can achieve significant cost savings and better resource optimization using AWS-offered commitment-based discounts and optimization tools.

3.1. AWS Trusted Advisor

AWS Trusted Advisor provides recommendations by analyzing your AWS infrastructure- it scans improvement areas for cost optimization, security, and performance.

This service can help you identify changes that will yield financial benefits- like removing unused AWS services such as EC2 instances, RDS databases, and idle load balancers.

Do I Have To Pay Separately For AWS Trusted Advisor?

It is bundled with AWS Support Plans, so you do not have to pay separately.

Learn more about AWS Support Plans pricing here.

3.2. AWS Compute Optimizer

AWS Compute Optimizer uses machine learning to recommend the best AWS compute resources for your workloads, reducing costs and improving performance.

It analyzes data usage to help you avoid over-provisioning or under-utilizing resources like EC2 instances, EBS volumes, Auto Scaling Groups, and Lambda functions.

Pricing Options:

It is free for basic analysis, but detailed reports require AWS Enterprise Support.

3.3. AWS Savings Plans and Reserved Instances

AWS Savings Plans and Reserved Instances (RIs) are two key cost-saving tools in FinOps. They enable businesses to reduce expenses in the long term while using AWS resources.

AWS Savings Plans offer up to 72% savings on EC2, Lambda, and Fargate usage by committing to one—or three-year plans. They are flexible, allowing savings across different instance types and regions.

Reserved Instances offer up to 75% savings by reserving EC2 instances for one or three years. While less flexible than Savings Plans, they are ideal for predictable workloads.

4. Automation and Governance Tools

Organizations should automate FinOps processes and implement governance policies to maintain continuous cost optimization.

4.1. AWS Auto Scaling

AWS Auto Scaling dynamically adjusts resources like EC2, ECS, DynamoDB, and Aurora based on demand, helping prevent over-provisioning and idle resources.

By setting scaling policies, you can auto-adjust compute power according to usage patterns and use scheduled scaling to reduce costs during off-peak hours.

AWS Auto Scaling is free to use, but the resources that scale will generate standard AWS charges.

Read more on AWS Auto Scaling documentation.

4.2 AWS Control Tower

AWS Control Tower automates the setup of multi-account AWS environments, offering a centralized approach to managing and governing AWS accounts.

It includes automated guardrails for cost controls and centralized visibility of cloud resources. It also integrates with AWS Budgets and Cost Explorer for cost monitoring.

While AWS Control Tower is free for management, the AWS services and resources it provisions are subject to standard charges based on usage.

Are you keen to learn AWS cost control techniques? Check our blog “Ways to Optimize AWS Costs.”

FinOps Best Practices in AWS: Cost Efficiency with Smarter Cloud Management

Implementing FinOps in AWS helps manage, optimize, and track cloud costs, ensuring that your cloud infrastructure aligns with your organization’s financial goals. Here are some best practices:

1. Tagging for Cost Allocation

AWS Cost Allocation Tags help assign metadata to resources for accurate cost attribution. Implement a consistent tagging policy (e.g., "Project," "Environment," "Team") for visibility and accountability. Automate tagging with AWS Lambda to apply tags consistently.

Use AWS Config for regular audits to ensure compliance and avoid missed cost attribution. In complex environments, multi-account AWS organizations and consolidated billing can allocate costs by department or project.

Get more information on tracking costs using AWS cost allocation tags

2. Rightsizing Resources

Rightsizing optimizes costs by aligning resources with workload needs. Monitoring EC2 usage through AWS CloudWatch helps identify underused or overloaded instances, while AWS Compute Optimizer recommends cost-effective instance types.

Combined with EC2 Auto Scaling, it ensures dynamic adjustments for fluctuating workloads.

Regular reviews align resources with evolving demands, ensuring efficiency and cost control without compromising performance.

3. Auto Scaling for Efficiency

AWS Auto Scaling adapts infrastructure to real-time demand, ensuring availability and cost efficiency. By setting dynamic scaling policies, resources adjust based on metrics like CPU usage or request rate.

AWS Elastic Load Balancer ensures even traffic distribution, while custom metrics via AWS CloudWatch refine scaling. Testing policies with AWS CloudFormation helps verify performance during traffic spikes, optimizing efficiency and cost.

4. Regular Cost Audits

Frequent audits are essential to controlling cloud costs.

AWS Cost Explorer helps track spending by service, region, or account, while Cost and Usage Reports provide detailed tracking. AWS Budgets and Cost Anomaly Detection can alert you to unusual spending patterns.

Analyzing reports regularly and collaborating with finance, engineering, and operations teams ensures that all departments stay accountable and efficiently optimize cloud expenses.

5. Automated Budgeting and Forecasting

Automated budgeting and forecasting help align AWS costs with financial goals. Setting specific budgets and receiving alerts for potential overages ensures costs stay on track.

Tools like AWS Trusted Advisor can offer optimization recommendations, such as resizing resources or converting On-Demand instances to Reserved Instances.

Additionally, AWS Cost Explorer helps forecast future spending based on historical trends, aiding in planning. Integrating these tools with financial systems provides a comprehensive view of cloud expenses, preventing overruns and supporting effective resource allocation.

6. Reducing Costs with Spot Instances

AWS Spot Instances provide substantial savings by using unused EC2 capacity at discounted rates. They are perfect for non-critical workloads. To ensure service continuity, combine them with EC2 Auto Scaling.

Using a mix of Spot and On-Demand instances balances cost savings with reliability.

For better management of Spot Instances at scale, Spot Fleet allows automatic selection of the best instances, further reducing costs while maintaining performance and availability.

7. Choosing the Right Pricing Models

AWS offers several pricing models to optimize cloud costs, so understanding and selecting the right pricing model can significantly impact your overall cloud spending.

Reserved Instances provide significant discounts for long-term, steady-state workloads but require commitment. Alternatively, Savings Plans offer flexibility and enable cost savings across instance types and regions.

The On-Demand Instances provide flexibility for unpredictable workloads, while Spot Instances offer savings for non-critical tasks.

Conclusion

AWS FinOps tools, combined with best practices, offer potent solutions to optimize cloud costs and improve resource management.

By leveraging AWS Savings Plans, Reserved Instances, Auto Scaling, and Control Tower, businesses can reduce waste, align resources with actual demand, and scale infrastructure more efficiently.

For businesses using DevOps outsourcing, these tools can provide visibility and control over cloud spending, ensuring that outsourced teams operate within budget and follow cost-efficient best practices.

FinOps in AWS: Best Tools and Practices for Cloud Cost Optimization

Written By Chandra Rana

Feb 07, 2025

Chandra is a tech content writer who is passionate about AWS and cloud technologies. He creates compelling blogs and guides that resonate with tech audiences, helping them understand and apply cloud computing concepts.