15 AWS Native Tools to Master Cost Optimization

AWS often feels expensive, and it usually is if you don’t know what you're spending on.

But the top companies like Netflix and Airbnb have shown that with the right visibility and practices, it’s possible to achieve the best ROI on cloud spending.

This is possible if you have dedicated FinOps teams focused on monitoring and optimizing costs using advanced tools and strategies.

However, for most organizations, cloud costs are complex, and they may not have the expertise or budget to use advanced tools.

This post focuses on native AWS tools that can help you gain visibility, optimize, and set controls to manage your cloud spend effectively.

I’ll list and briefly explain them, categorizing them according to the FinOps phases: Inform, Optimize, and Operate, for better clarity.

If you're not familiar with the FinOps lifecycle, I recommend reading following first before moving on.

→ Understanding FinOps Lifecycle and Implementing it in AWS

This image was generated using Google AI Studio.

Phase: Inform

In this phase, we explore AWS tools that offer cost visibility, helping us understand where the spending is happening and how much is being spent.

Cost Explorer

Cost Explorer helps you visualize your AWS spending with easy-to-read graphs.

You can see how much you’re spending, which services cost the most, and spot daily or monthly trends.

The tool is free, updates daily, and allows you to export data as CSV for further analysis

Where to find it:

AWS Console → Billing and Cost Management → Cost Explorer

Cost and Usage Report (CUR 2.0)

This tool provides all the detailed billing and usage reports you'll ever need.

The reports are comprehensive and delivered in CSV format, automatically saved to your S3 bucket.

A key feature is its ability to breaks down costs by time (hourly, daily, monthly), service, resource, and custom tags, giving you full visibility into your AWS usage.

To access this report, you’ll need to create a job.

How to create it:

AWS Console → Billing and Cost Management → Data Exports → Create export

Once the report is available, you can analyze it more effectively using tools like Amazon QuickSight, or query it with Athena or Redshift for deeper insights.

Cost Categories

AWS Cost Categories help you organize your cloud spend by grouping costs based on accounts, services, tags, regions, charge types, and more.

You can define custom rules to group expenses by business units, projects (like tag Project = ProjectA), or services (like EC2 and S3). This gives you a clear view of where your costs are coming from.

How to access:

AWS Console → Billing and Cost Management → Cost Categories

Cost Allocation Tags

Cost Allocation Tags help you track and organize AWS costs by assigning labels to your resources(EC2, Snapshot, RDS etc).

These tags can be custom labels that reflect business details such as environment, owner, or project.

There are two types:

• User-defined tags (e.g., Environment=PROD)

• AWS-generated tags (like aws:createdBy)

To use these tags in billing and reports, you must activate them so they appear in tools like Cost Explorer or AWS Budgets.

AWS Console → Billing and Cost Management console → Cost Allocation Tags.

Example:
Tag your resources with Environment=DEV, STAGE, or PROD. Once activated, you can filter and analyze costs by environment making it easier to allocate costs to projects or teams and improve visibility.

AWS Budget

With AWS Budgets, you can set custom budget limits for cost utilization. When thresholds are exceeded, you get alerts, and optionally, you can automate actions using Lambda.

AWS Console → Billing and Cost Management → Budgets

You can start with pre-built templates or create custom budgets based on your needs.

Common Use Cases:

• Alert when monthly AWS bill exceeds $10,000 (trigger at 80%, 100%, or forecasted).

• Notify if EC2 instance hours exceed $1,000 per month.

• Track cost for resources tagged Environment:Dev, and alert if over $5,000.

• Enforce action: Deny ec2:RunInstances using an IAM policy via SNS + Lambda if cost exceeds $30,000.

AWS Cost Anomaly Detection

AWS Cost Anomaly Detection uses machine learning to automatically detect unusual spikes in your AWS spending, helping you catch unexpected cost increases early.

When an anomaly is detected, you receive alerts, along with insights into what caused it, where it occurred, and why.

The system checks for anomalies three times daily, and detection/reporting may take up to 24 hours.

Phase: Optimize

In this phase, we’ll explore AWS tools that help optimize compute and storage resources.

Since optimization is the first step toward achieving cost savings in FinOps, these tools play a critical role in driving meaningful changes.

Saving Plans(SPs) and Reserved Instances(RIs)

Savings Plans offer up to 72% savings on compute services like EC2, Fargate, and Lambda.

You agree to spend a fixed amount per hour (for example, $75/hour) for 1 or 3 years. In return, AWS gives you lower prices.

It is flexible because you do not need to commit to a specific instance type, operating system, or region.

Example:

If you usually run EC2 instances that cost $75/hour at On-Demand rates, you can commit to that same $75/hour spend through a Savings Plan. AWS will then charge you less for that usage, often around 30 to 70 percent cheaper, depending on the plan and term.

But once you commit, you must pay that amount whether you use it fully or not.

Reserved Instances also provide long-term savings similar to Savings Plans, but with less flexibility. You must commit to specific instance attributes (type, OS, region, tenancy).

Example:

If you run 3 EC2 t3.large instances 24/7 in one region, On-Demand costs about $7,200 per year.

With Reserved Instances, you commit to those instances for 1 year and pay around $1,800 to $3,600, saving up to 75%.

But you must stick to the same instance type, region, and OS, and pay whether you use them or not.

You can buy RI for EC2 instances, RDS, ElastiCache, Redshift and OpenSearch.

AWS Console → Billing and Cost Management

Spot Instances

Spot Instances let you use EC2 compute capacity at up to 90% discount compared to On-Demand prices.

This discount is possible because you're using AWS’s unused EC2 capacity.

However, Spot Instances can be interrupted at any time when AWS needs the capacity back. That's why Spot Instances are ideal for fault-tolerant and flexible workloads.

AWS EC2 Auto Scaling Groups

While EC2 Auto Scaling might not appear to be a cost-saving feature at first, it can actually help reduce costs by automatically adjusting your EC2 capacity based on real-time demand.

You define minimum, desired, and maximum instance counts to match your workload.

However, poor configuration can lead to over-scaling (higher costs) or under-scaling (performance issues).

Properly tuned, Auto Scaling ensures you only pay for the compute you actually need avoiding over-provisioning.

AWS Console → EC2 → Auto Scaling groups

AWS Compute Optimizer and Trusted Advisor

AWS Compute Optimizer helps you right-size compute resources like EC2, Auto Scaling groups, EBS, Lambda, RDS, and ECS on Fargate by analyzing historical usage.

It provides cost and performance recommendations, such as:

• Flagging EC2 instances as underutilized, over utilized, or optimized.

• Suggesting EBS volume changes in IOPS, throughput, type or storage size.

AWS Console → AWS Compute Optimizer

AWS Trusted Advisor offers a broader view. It audits your AWS environment for cost, security, performance, fault tolerance, and service limits.

It helps reduce costs by identifying idle, unassociated, or unused resources that can be safely removed or downsized.

AWS Console → AWS Trusted Advisor

AWS Cost Optimization Hub

AWS Cost Optimization Hub is a new tool that acts as a centralized dashboard that helps you discover and manage cost-saving opportunities across your entire AWS organization.

It provides recommendations on cost optimization, such as EC2 rightsizing, Graviton migration, Idle resource cleanup, RDS and Aurora optimization, Reserved Instances and Savings Plan suggestions and more.

It quickly answers key questions like:

• How much can I save by rightsizing resources?

• Which account has the most unused or costly resources?

• What are the top actions I should take right now to reduce costs?

AWS Console → Billing and Cost Management → AWS Cost Optimization Hub

S3 Storage Lens

It’s a central dashboard that gives you full visibility into your S3 usage and activity across all AWS accounts.

With its built-in metrics, you can easily spot issues like incomplete multipart uploads, too many noncurrent versions, missing lifecycle rules, and fast-growing buckets all of which help you save money on S3.

Phase: Operate

In this phase, we focus on tools and services that help control cloud costs through governance and policy enforcement.

AWS Organization

AWS Organizations is a powerful tool for managing multiple AWS accounts. It lets you consolidate billing across all accounts into a single central account, making it easier to track and pay for usage. You can also apply policies, automate tasks, and manage access centrally across all linked accounts.

Service Control Policies (SCPs)

This tool lets you create rules that apply across all AWS accounts in your organization. These rules help you control what services and actions users can use.

For cost optimization, you can:

• Block expensive instance types like p, u, or x families.

• Prevent users from creating resources in unwanted regions.

• Allow only Spot Instances in development accounts.

SCPs work like IAM policies, so you can write custom rules to fit your needs.

Tag Policies

Tag Policies enforce consistent tagging across AWS resources by requiring specific tags during resource creation. This reduces tag clutter, improves cost visibility, and enables accurate cost allocation and tracking.

By leveraging these AWS-native tools, even small teams can gain control over their cloud spend.

The first rule is to start simple: set up budgets, apply tagging policies, and optimize low-hanging resources.

There are other helpful tools such as the AWS Free Tier, AWS Cost Calculator, CloudWatch and more, but I’ve kept things brief for now. I’ll cover those in a separate post.

As we wrap up, I’d love to hear your thoughts or feedback.

Thanks for reading!

- Alon