Looking for the most effective AWS cost optimization tips in 2025? Cloud spending can spiral quickly if not actively managed. Whether you’re a startup, growing business, or enterprise, using proven AWS cost optimization best practices should be an ongoing part of your cloud infrastructure management strategy.

In this article, we present 10 actionable strategies to cut costs without sacrificing performance. These techniques are easy to implement and can deliver real savings in the first month. If you need support with optimization, see how we can help →

Unlock smarter cloud savings with these AWS cost optimization tips – practical, proven, and ready for 2025

1. Right-size your instances

One of the most effective AWS cost optimization tips is right-sizing your instances. Oversized instances are a common cause of unnecessary cloud spending. Correctly matching the size of the instance to the actual load requirements (so-called right-sizing) optimizes both cost and performance. 

AWS offers a number of tools to support resource utilization analysis – such as AWS Compute Optimizer – which help select the optimal CPU, RAM and disk configuration. Regular reviews and adjustments are essential to optimize AWS infrastructure efficiently.

Benefits:

• You will avoid overpaying for unused resources.
• You will increase performance depending on your application requirements.

More information: If you want to learn how to optimize your EC2 instances, see the AWS documentation on Right-sizing.

2. Leverage Reserved Instances

If your environment is of a predictable, long-term nature, purchasing Reserved Instances (RIs) can cut cloud expenses by up to 75% compared to On-Demand instances. AWS offers several options: Standard RIs for maximum savings and Convertible RIs for greater flexibility. RIs are particularly cost-effective for databases, production applications or backend servers that run 24/7.

Alternatively, Savings Plans also provide excellent opportunities to optimize AWS costs (up to 72% in discounts) in exchange for a 1- or 3-year usage commitment, but with more flexibility than RIs. Compute Savings Plans apply across instance families, regions, and even services like Fargate or Lambda, making them ideal for dynamic environments. EC2 Instance Savings Plans are more similar to RIs, focusing on specific instance families within a region, but still offer automatic application across matching usage. In many cases, Savings Plans provide comparable cost benefits with easier management and broader applicability.

Benefits:

• Significant savings for stable environments.
• Flexible adaptability (e.g. Convertible RI or Compute Savings Plans).
• Easier commitment management and broader use cases with Savings Plans.

3. Utilize Spot Instances

Spot Instances are unused computing resources offered by AWS at up to 90% cheaper than standard instances. They are ideal for tasks that can be interrupted and resumed – such as data processing, automated tests, simulations or background rendering. Thanks to their flexible approach and integration with Auto Scaling and EC2 Fleet, Spot Instances allow you to achieve high computing power while cutting AWS costs.

Benefits:

• Low computing costs.
• Flexibility and scalability with minimal budget.

4. Implement Auto Scaling 

AWS Auto Scaling allows you to dynamically adjust the number of instances according to the actual demand of your application – increasing them during traffic spikes and decreasing them when there are fewer users. This ensures your environment runs efficiently, but you don’t overpay for excess resources. Auto Scaling works well for both web applications and data processing systems.

Benefits:

• Cost savings during low traffic hours.
• Increased availability and performance.

5. Delete unused resources

Eliminating unused resources is one of the simplest AWS cost optimization tips. Many AWS users don’t realise how many of these resources generate costs – we’re talking about old snapshots, unconnected EBS volumes, inactive Elastic IP or instances forgotten in test environments. Regular infrastructure audits and automated scripts to clean up the environment can bring immediate savings.

Benefits:

• Elimination of “ghost” costs in the infrastructure.
• Cleaner environment and better management.

6. Monitor and analyze costs

No AWS cost optimization strategy is complete without continuous monitoring. With tools such as AWS Cost Explorer and Cost & Usage Reports, you can analyse where and how funds are being spent. Expenses can be analysed by tag, service, account or project. It is also worth setting up alerts to warn you when you are approaching your planned budget.

Benefits:

• Improved control over costs.
• Ability to detect anomalies and sources of inefficiency.

7. Optimize storage costs

Not all data needs to be stored in the most expensive storage classes. AWS offers a variety of storage options – from the high-performance EBS SSD, to the versatile S3 Standard, to the low-cost and durable S3 Glacier or S3 Intelligent-Tiering. The key to saving money is to match the type of storage to the characteristics of your data – for example, keep frequently used files in S3 Standard and archives in Glacier.

Benefits:

• Reduction in monthly data storage costs.
• Improved data lifecycle management (e.g. automatic archiving).
• Ability to set rules (Lifecycle Policies) that automatically move data to lower cost layers.

8. Use AWS Budgets

Controlling your spending in real time is key, especially in environments that change quickly. AWS Budgets allows you to set cost limits and then automatically sends you alerts when you approach a set threshold – via email or SMS. You can also set different alerts for different projects or teams.

Benefits:

• Proactive approach to budget management.
• Improved visibility of spend across the organisation.
• Ability to integrate with AWS Chatbot for notifications directly to Slack or Teams.

9. Consider serverless computing

Serverless architecture is a modern way to cut cloud expenses. Traditional server-based models often generate costs even when the application is not actively used. With a serverless architecture such as AWS Lambda, you only pay for code execution – no charges for idle time or infrastructure. This works great for event-driven applications, mobile backends or automation.

Benefits:

• No “waiting time” costs – you only pay for actual use.
• Automatic scaling with no configuration required.
• Ideal for test environments, MVPs and systems with variable traffic.

10. Optimize data transfer costs 

Many overlook data transfer as a source of cost, but it’s a crucial part of AWS cost optimization as it can put a significant strain on budgets – especially when communicating between regions or Availability Zones. A well-designed network architecture, such as using Amazon CloudFront, VPC Peering or local endpoints, can reduce these expenses.

Benefits:

• Lower data transfer bills for the same performance.
• Improved application performance through shorter access paths.
• Ability to avoid egress costs by optimizing regions and using edge location.

Frequently Asked Questions (FAQ)

Q: What is the best way to reduce AWS EC2 costs in 2025?

A: The most effective ways to reduce AWS EC2 costs include right-sizing instances to match workload requirements, purchasing Reserved Instances for predictable usage, and leveraging Spot Instances for non-critical or flexible workloads. These strategies can help you cut costs by up to 75% while maintaining performance and availability.

Q: How can I monitor and manage AWS cloud spending effectively?

A: You can monitor your AWS costs using native tools like AWS Cost Explorer, AWS Budgets, and Cost and Usage Reports. These services allow you to analyze spending trends, set budget alerts, and identify cost optimization opportunities in your AWS environment.

Q: What is serverless computing in AWS, and how does it reduce cloud costs?

A: Serverless computing on AWS – using services like AWS Lambda, Amazon API Gateway, and Step Functions – allows you to run code without provisioning or managing servers. You pay only for the compute time used, which makes it a highly cost-efficient option for event-driven applications, APIs, and workflows with unpredictable or low traffic.

Start optimizing your AWS costs today

AWS cloud cost optimization doesn’t have to be complicated. By applying these 10 proven AWS cost optimization tips – such as right-sizing EC2 instances, using Spot and Reserved Instances, optimizing storage, and leveraging serverless computing – you can significantly reduce your monthly AWS bill.

Whether you’re a startup or an enterprise, these AWS optimization techniques help lower cloud costs without sacrificing performance, scalability, or security. Start optimizing your AWS infrastructure today and take full control of your cloud spend.