AWS Cost Optimization Techniques: Practical Guide for 2026

AWS offers hundreds of services with complex pricing models. Without deliberate optimization, costs can quickly exceed budgets. This guide provides practical, actionable techniques organized by AWS service to help you achieve measurable savings.

EC2 Optimization Techniques

Instance Right-Sizing

Analyze CloudWatch metrics to identify underutilized instances. Look for instances with consistent CPU utilization below 40% or memory usage below 60%. These are candidates for downsizing.

# AWS CLI command to find underutilized instances
aws cloudwatch get-metric-statistics \
  --namespace AWS/EC2 \
  --metric-name CPUUtilization \
  --dimensions Name=InstanceId,Value=i-1234567890abcdef0 \
  --start-time 2025-01-01T00:00:00Z \
  --end-time 2025-01-07T00:00:00Z \
  --period 3600 \
  --statistics Average

Graviton Processors

AWS Graviton instances offer up to 40% better price-performance compared to x86 instances. Migrate compatible workloads to Graviton for immediate savings without sacrificing performance.

Spot Instance Strategies

Implement diversified spot pools across multiple instance types and availability zones. Use Spot Fleet or EC2 Auto Scaling with mixed instances policy for 60-90% savings.

RDS Optimization Techniques

Instance Class Optimization

Many RDS instances are oversized for their workloads. Use Performance Insights to analyze database performance and identify opportunities to downsize without impacting application performance.

Aurora Serverless v2

For variable workloads, Aurora Serverless v2 automatically scales capacity based on demand. This eliminates overprovisioning and can reduce database costs by 40-60%.

Reserved Instances for Databases

RDS Reserved Instances offer up to 69% savings for predictable database workloads. Start with 1-year reservations for baseline capacity.

S3 Storage Optimization

• S3 Intelligent-Tiering: Automatically moves objects between access tiers, saving up to 40%
• Lifecycle Policies: Transition objects to Glacier for 90% savings on archival data
• S3 Storage Lens: Identify cost optimization opportunities across buckets
• Delete incomplete multipart uploads: Recover wasted storage costs

Lambda Optimization Techniques

Memory and Timeout Configuration

Lambda pricing is based on memory and execution time. Use AWS Lambda Power Tuning to find the optimal memory configuration that minimizes cost while meeting performance requirements.

Graviton2 for Lambda

Lambda functions running on Graviton2 (arm64) offer 34% better price-performance. Most Python, Node.js, and containerized functions can migrate without code changes.

Provisioned Concurrency Optimization

Only use Provisioned Concurrency for latency-sensitive functions. Review usage patterns and scale provisioned concurrency to match actual demand.

Data Transfer Optimization

VPC Endpoints

Use Gateway and Interface VPC Endpoints to keep traffic within AWS network. This eliminates NAT Gateway data processing charges for S3 and DynamoDB access.

CloudFront for Origin Shield

Enable Origin Shield to reduce origin fetch costs by up to 50%. Combine with appropriate cache policies for maximum efficiency.

Regional Architecture

Minimize cross-region data transfer by keeping related services in the same region. Use S3 Transfer Acceleration only when the speed benefit justifies the cost.

Commitment-Based Savings

• Compute Savings Plans: Up to 66% savings with flexibility across EC2, Fargate, and Lambda
• EC2 Instance Savings Plans: Up to 72% savings for specific instance families
• Reserved Instances: Best for predictable, steady-state workloads