10 Proven Ways to Reduce AWS Costs in 2026

Introduction

Cloud costs continue to be a major concern for businesses of all sizes. With AWS being the dominant cloud provider, optimizing your AWS spending can lead to significant savings. In this guide, we'll explore 10 proven strategies that can help you reduce your AWS costs by up to 40%.

1. Rightsize Your EC2 Instances

One of the most common sources of cloud waste is over-provisioned EC2 instances. Many organizations run instances that are larger than needed for their actual workloads.

How to identify rightsizing opportunities:

• Use AWS Compute Optimizer for recommendations
• Analyze CPU and memory utilization over 14+ days
• Look for instances consistently running below 40% utilization

Pro tip: CloudSavvy automatically identifies underutilized instances and provides specific rightsizing recommendations with estimated savings.

2. Leverage Reserved Instances and Savings Plans

If you have predictable workloads, Reserved Instances (RIs) and Savings Plans can reduce costs by up to 72% compared to On-Demand pricing.

When to use Reserved Instances:

• Production workloads running 24/7
• Databases with consistent capacity needs
• Long-term applications with stable requirements

Savings Plans vs. Reserved Instances:

• Savings Plans offer more flexibility across instance families
• RIs provide the deepest discounts for specific configurations
• Consider a mix of both for optimal savings

3. Implement Automated Scheduling

Not all workloads need to run 24/7. Development, testing, and staging environments often sit idle during nights and weekends.

Savings potential: Up to 65% on non-production environments

Implementation approaches:

• AWS Instance Scheduler for EC2 and RDS
• Lambda functions with EventBridge rules
• Third-party tools like CloudSavvy's automated scheduling

4. Clean Up Unused Resources

Orphaned resources are a silent budget killer. Common culprits include:

• Unattached EBS volumes
• Old EBS snapshots
• Unused Elastic IPs
• Idle load balancers
• Forgotten test resources

Regular cleanup checklist:

• Review unattached volumes monthly
• Set snapshot lifecycle policies
• Tag all resources for ownership tracking
• Implement automated cleanup scripts

5. Optimize S3 Storage Costs

S3 storage costs can grow unexpectedly. Implement these strategies:

Use appropriate storage classes:

• S3 Standard for frequently accessed data
• S3 Intelligent-Tiering for unknown patterns
• S3 Glacier for archives (up to 95% cheaper)

Enable lifecycle policies:

• Transition old data to cheaper storage classes
• Delete incomplete multipart uploads
• Set expiration rules for temporary data

6. Monitor and Optimize Data Transfer

Data transfer costs are often overlooked but can represent 10-15% of your AWS bill.

Cost reduction strategies:

• Use VPC endpoints for AWS service access
• Consider AWS PrivateLink for cross-account traffic
• Implement CloudFront for content delivery
• Review cross-region and cross-AZ data transfer

7. Optimize RDS Costs

Database costs can be significant. Consider these optimizations:

• Rightsize database instances based on actual usage
• Use Reserved Instances for production databases
• Consider Aurora Serverless for variable workloads
• Implement read replicas strategically
• Review provisioned IOPS requirements

8. Leverage Spot Instances

Spot Instances offer up to 90% savings for fault-tolerant workloads.

Ideal use cases:

• Batch processing jobs
• CI/CD pipelines
• Big data analytics
• Stateless web applications with auto-scaling

Best practices:

• Diversify across instance types and AZs
• Use Spot Fleet for automatic capacity management
• Implement proper interruption handling

9. Implement Proper Tagging

Without proper tagging, you can't allocate costs or identify optimization opportunities.

Essential tags:

• Environment (prod, dev, staging)
• Owner (team or individual)
• Project or application
• Cost center

Enforce tagging policies:

• Use AWS Organizations SCPs
• Implement tag policies
• Set up alerts for untagged resources

10. Use Cost Monitoring Tools

Real-time visibility is essential for ongoing optimization.

Key capabilities to look for:

• Anomaly detection for unexpected spikes
• Budget alerts before overspending
• Actionable recommendations
• Multi-account and multi-cloud support

How CloudSavvy helps: CloudSavvy provides real-time cost monitoring, Intelligent recommendations, and automated alerts. Our customers typically identify 20-40% in potential savings within the first week.

Conclusion

Reducing AWS costs requires a combination of rightsizing, commitment discounts, automation, and continuous monitoring. Start with the quick wins like cleaning up unused resources and implementing scheduling, then move to more strategic optimizations like Reserved Instances.

Ready to start saving? Try CloudSavvy free for 3 days and get personalized recommendations for your AWS environment.