We’ve all seen how much you can save from buying in bulk. Whether it’s bags of rice or industrial orders of raw materials, the more you’re billed for at once, the more likely you are to get a discount on the overall price.
That’s one of the biggest reasons why you need to form an AWS organization for consolidated billing.
These AWS organizations let you combine your AWS bills from all of your accounts into one central bill. No more scrabbling over accounts and trying to remember 4 sets of login data just to figure out what you’re spending. No more dribs and drabs of Amazon EC2 usage at the highest price there is.
Let us take you through the world of consolidated billing for AWS. This post will do just that by covering:
- What is consolidated billing for AWS?
- Benefits of consolidated billing on AWS
- Managing billing and account activity
- How to analyze the combined data effectively
Let’s get started.
What is consolidated billing AWS?
Consolidated billing for AWS is a feature that allows you to group the bills of several AWS user accounts together under one management account through the use of an AWS organization.
This prevents you from having to pay all of your AWS bills separately if you have multiple accounts, or if you have multiple team members who have their own individual company AWS accounts. It’s an incredibly handy feature, as AWS billing is complicated enough without having to keep track of several users' worth of accounts separately.
The same is true of situations where you have AWS accounts dedicated to individual projects. Without consolidated billing you’ve got a nightmare of separate bills and financial information to chase up when it comes to your regular bookkeeping. With it, you can much more easily present a high-level figure to your manager (and any other higher-ups) to show them exactly what you’re spending and how it’s being spent.
Plus, if you’ve organized your AWS accounts carefully and have clear divisions between each of their purposes (eg, a Dev environment, a Prod environment, etc), you can instantly see which parts of your AWS bill are costing the most money. Once you know where the biggest chunks of your budget are going, you can more easily look into ways to reduce your costs or to justify expanding your budget to the finance department or your CFO.
The only real downside to consolidated billing AWS is that you have to be careful when setting up the organization that’s going to be billed, and the permission levels of any member accounts.
Upon setting up your organization (the group for your accounts) in the “Consolidated Billing” section of the AWS Organizations console or the AWS Billing console, you’ll have to choose an account that’s considered the “manager”. This is the account that will be billed for all other accounts in the organization.
Any other account that you add will then be considered a “member” which is separate from other members. These all come with their own customizable permission levels and, if you don’t change them from their defaults, all of these can increase their spending without prior approval.
This means that any of your accounts can quickly run up their bill if they start altering their resource allocation, buying new instances, increasing their usage, and so on. It’s incredibly important to get this under control immediately if you’re not also entirely responsible for those accounts and have manual, personal control over their operation.
Benefits of consolidated billing on AWS
Here are the main benefits of using consolidated billing for your AWS organization:
- It reports all your spending in context
- It simplifies tracking and management
- You can access discounts more easily
- It takes the risk out of agreeing to discount contracts
- It helps you detect rogue spending
It reports all your spending in context
The first major benefit is that it, well, consolidates all of your member account bills into one. You don’t have to go around each and every account trying to find all of the bill information, because all of it has been gathered and combined for you already.
This is a massive benefit even though it arguably makes your single bill more complicated at the same time.
For example, it’s difficult to know whether what you’re spending in a QA environment is a lot compared to what you’re getting out of it when you just see a total bill. However, when you get a consolidated invoice you can much more easily judge the cost of the environment versus the cost of your production environment, and thus whether the QA costs seem appropriate.
Having to present your finances will, in turn, become much easier too. Since you’re able to get all of your figures from one location rather than having to chase them up and combine them all, it’s a far simpler process to bring your total spending together, attribute that spending to the individual accounts, and take things from there.
The simpler bill will also be easier to understand for anyone who doesn’t have a lot of AWS experience. Plus, since your CFO or CEO has a much better chance of listening to you (and potentially increasing your budget when you ask them to) when they understand what you’re telling them and why you need to spend what you are, your team can benefit in the long run from actually having access to the resources that they need to scale your efforts.
It simplifies tracking and management
Following on from simplifying your financial statements, the combined bills and accounts also benefit your own department by making it easier to track and manage all of your resources.
Every consolidated bill has a summary that shows your spending on every AWS product, followed by a per-account breakdown. This lets you track all of your spending on, say, storage, and see what percentage of it is attributed to each linked account without having to dive into Cost Explorer.
As stated earlier, by grouping all of your accounts into one bill you make it almost painfully obvious as to what’s costing you a lot of money. Compare that with your usage statistics and the relative worth that each of the AWS accounts is bringing to your operation, and suddenly you have a way to measure the RoI of every account without having to manually drag all of their figures out and combine them.
True, you still have to have the experience to get the insight you need. However, having all of the information in one place before you even start your analysis will save you a huge amount of time and an inevitable headache compared to the alternative.
You can access discounts more easily
Moving on, there’s another benefit that is a little more complex, but is the biggest material gain that comes from using consolidated billing. By grouping all of your accounts together, you can access discounts that you wouldn’t be able to with separate accounts.
This is all down to the way that AWS classifies your bill once it’s combined.
When your AWS accounts are separated and billed as such, each becomes eligible for discounts based on their own statistics. One may qualify for a specific Savings Plan, another may become cheaper by purchasing a Reserved Instance instead.
However, as with many discounts, the potential savings are much greater with higher base bills.
Groceries are cheaper when bought in bulk. Materials sold to providers are done so in huge amounts at a reduced rate. AWS discounts work in the same way - some of the discounts which you can get are only available to those who spend more on certain elements.
Remember that the majority of AWS pricing points follow a trend of getting cheaper as you use more data. For example, the On-Demand pricing (not counting the first free 100 GB/month) for data transfer out from Amazon EC2 to the internet is $0.09 per GB for the first 10 TB/month, then $0.085 per GB for the next 40 TB/month, $0.07 per GB for the following 100 TB/month, and finally $0.05 per GB for anything beyond that.
Let’s say that you’ve got two accounts (we’re keeping things simple). The first sends 100 TB and 100 GB per month out to the internet from EC2, and the other sends 150 TB and 100 GB per month. The first 100 GB of each account is covered by the free limit, and separately their costs would come to $19,100 ($7,800 for the first account and $11,300 for the second). Paying together would result in one account that sends 250 TB and 200 GB per month, pushing the majority of your costs into the lower price range and resulting in a total cost of $16,305!
That’s just one example of how consolidated billing helps with discounts.
Another is that, should your annual spending exceed $500,000, you’ll become eligible for the Enterprise Discount Program (EDP), which can save you a huge amount of money. If all of your accounts are separate then each will individually have to qualify, but consolidating your AWS bills lets you qualify if your combined spend totals $500,000 or more.
By grouping all of your AWS accounts into a single bill, suddenly all of your costs are being combined and paid for under one account. That means that, rather than having several small bills that might qualify for the odd discount, you have a unified large bill which can make you eligible for much greater savings overall.
It takes the risk out of agreeing to discount contracts
Let’s say that you have several AWS accounts, some with Savings Plans, some with Reserved Instances.
If you purchase and bill all of these separately to each account, that means that your organization is locked into the entire term of the contract. It doesn’t matter whether you stop using that account or your circumstances change; you’re stuck with your SP or RI for as long as you originally committed, meaning that you’re losing a huge portion of its value (even if you sell on your RIs).
However, if all of your accounts are managed and billed through a single consolidated account, that means that your discounts are applied across all of your accounts rather than being tied to a specific one. In other words, if your circumstances change and you close the account that was taking advantage of a SP or RI or so on, that discount will be automatically applied to any other account your consolidated one manages (if they fit the criteria for the discount).
It helps you detect rogue spending
Finally, let’s address the potential for rogue spending.
If you consolidate your accounts under one bill, this means that any new accounts created without your prior knowledge and approval will show up separately from your main bill. They won’t be included, and the account will be completely outside of your main organization.
So, when it comes time to examine your regular bill, you’ll instantly be able to tell if someone has created an unauthorized account or has purchased new resources without approval. It’s a fantastic way to stop your overall bill from running away from you.
Managing billing and account activity
Now that you know how beneficial consolidated billing for AWS can be, let’s dive into some of the more nuanced elements of what doing this will mean in terms of managing your bill and account activity.
As with everything else, having all of your accounts’ information in one place makes it possible to easily see everything in context. You’ll be able to compare your accounts against each other without having to load separate data, meaning that you can quickly and easily get a sense of what’s costing you the most money.
The important thing to remember is that just because these are combined into one large bill, that doesn’t mean you lose any of the important details. You can still clearly see the divides between your different accounts by using the AWS Billing console, a CUR, AWS Cost Explorer, or a 3rd-party tool to handle the data analysis for you.
The same is true for your usage statistics. When these are combined you can see and present the high-level picture to those who need to see such data, but you can still easily break down the usage data for more information on which accounts had the most uptime, which resources they were using, what times and for how long they were doing so, and so on.
By analyzing this data you can then make a decision on which accounts need to be scaled (eg, they’re topping out on their resource utilization) and thus need more assigned to them in your budget, and which ones could be reduced to cut costs where possible.
But what if you’re grouping together the bills for accounts that work autonomously, and are managed by separate sections of the team that need to perform their own analysis of their cost and usage data?
Well, thankfully, AWS still allows them to do that by looking at their individual AWS Bills pages. They don’t lose any of the potential insights from their data just because the account is being paid for by an overall managerial account. This means that they still have the flexibility to analyze their data and make changes based on their individual goals.
How to analyze the combined data effectively
One of the most difficult aspects of AWS to grapple with is making sense of the data available to you. We’ve talked (at length) before about how confusing the basic Cost and Usage Reports are, and it’s a pattern that’s carried through to the rest of AWS.
So, how can you analyze your combined accounts’ data effectively? How can you assess what you’d save from consolidated billing versus the less complex clarity of individual accounts handling their own data analysis?
Well, the answer is to do the same thing that you should be doing to effectively manage the rest of your AWS account. You use a third-party tool or service like our AWS Spend Transparency Software or AWS Cost Reduction Assessment.
With these two resources you can see clear breakdowns of all of your accounts’ cost and usage data in a concise and immediately understandable way. We can show you everything you need to know about which accounts are losing money that can be saved, which might benefit from being consolidated, and which you may want to consider keeping separate (and why that’s the case).
Aren’t sure which discounts you qualify for and which would be the most beneficial for you to use? We’ve got it covered - with our vast AWS experience we can help you to find the best contractual discounts you can possibly get, whether that’s by going through an EDP, SP, or by buying RIs.
Better yet, we can even point you in the right direction for how to effectively scale and optimize your setup so that your future looks brighter than ever.
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