How Much Does an AWS Server Cost?

Last Updated on October 22, 2024
Written by CPA Alec Pow | Content Reviewed by CFA Alexander Popinker

For organizations moving workloads to the cloud, one of the most pressing questions is: “How much will my AWS server cost?” With flexible on-demand pricing and a dizzying array of instance types and configurations, estimating your Amazon Web Services (AWS) spend can seem challenging.

This guide aims to provide clarity on the key factors driving AWS pricing. We’ll break down the available pricing models, compare instance costs across use cases, and outline best practices for optimizing your AWS cloud investment.

How Much Does an AWS Server Cost?

AWS offers customers several pricing models to cater to different needs:

On-Demand Instances

With on-demand instances, you pay for compute capacity by the hour without any upfront fees. This offers maximum flexibility but comes at a premium over other pricing models.

On-demand costs range from $0.0059 per hour for a t3.nano instance to $3.06 per hour for a high-performance z1d.12xlarge instance.

For many intermittent or spiky workloads, on-demand instances are the simplest option. But for steady-state usage, other pricing models can cut costs substantially.

Reserved Instances

Reserved instances allow you to make a 1- or 3-year commitment in return for significant discounts compared to on-demand pricing:

• 1-year term: Up to 51% savings
• 3-year term: Up to 72% savings

For example, an on-demand t3.micro costs $0.0104 per hour but a 3-year reserved instance is just $0.0031 per hour in us-east-1.

Reserved instances come in three payment options:

• All Upfront: Pay full amount upfront for biggest discount
• Partial Upfront: Pay a portion upfront, rest monthly
• No Upfront: Pay monthly with no upfront fee

Reserved instances are ideal for steady-state production workloads when consistent instance usage is expected.

Savings Plans

AWS Savings Plans go beyond just EC2 instances to offer discounted usage of a wide range of AWS services. With savings plans, you commit to a consistent usage amount over a 1- or 3-year term in return for discounts up to 72%.

Savings plan rates can be as low as $0.03 per hour depending on usage. They apply to services like EC2, Fargate, Lambda, DynamoDB, RDS, and ElastiCache.

Savings plans provide additional flexibility to scale usage up and down while still benefitting from discounted rates.

Spot Instances

Spot instances allow you to bid on unused EC2 capacity, potentially saving up to 90% compared to on-demand costs. Prices fluctuate based on current demand.

When spot instance capacity becomes unavailable, your workload is interrupted unless you adopt fault-tolerant designs. Still, spot instances can drive significant compute savings for batch jobs, big data workloads, image processing, and non-critical applications.

Spot instance pricing varies significantly but can be as low as $0.0058 per hour for some instance types in us-east-1.

Dedicated Hosts

Dedicated hosts provide isolated, dedicated hardware for compliance, licensing, or visibility needs. An entire physical server is allocated to a single customer.

For example, a 16-core x1e.32xlarge dedicated host with 480 GB RAM and 2 TB NVMe SSD storage starts at $16.17 per hour in US-east-1.

Dedicated hosts are best suited for specialized use cases with stringent regulatory requirements or BYOL license needs.

In summary, AWS provides a range of pricing models to suit different needs, from maximum flexibility to deep cost savings. Optimizing spending requires analyzing workloads and usage to select the right approach.

According to ClickIT, basic environments for website hosting typically range from $100 to $200 per month, while intermediate environments, which support high-performance websites, can cost between $250 and $600 per month. For advanced setups that require high scalability and availability, costs can escalate to between $600 and $2,500 per month.

Additionally, AWS’s official site provides a more granular breakdown of costs associated with hosting a static website. They report that typical monthly expenses can be around $1 to $3 if you exceed the AWS Free Tier limits. If you qualify for the Free Tier, hosting costs can drop to approximately $0.50 per month.

In a discussion on Reddit, users shared their experiences with AWS billing. One user estimated their costs for a standard stack (including EC2, RDS, and EBS) at around $60 per month, detailing specific charges like $10 for EC2, $3.50 for EBS storage, and additional fees for RDS and ElasticSearch services.

Moreover, the Tech.co site emphasizes that AWS pricing is highly variable based on usage patterns. For example, they suggest that users who optimize their configurations can significantly reduce costs by utilizing services like Amazon Lightsail, which starts at around $5 per month.

Factors Influencing AWS Pricing

Multiple variables drive the hourly cost of your AWS instances and resources. Understanding these pricing factors is key to accurate budgeting.

Instance Type

AWS offers over 300 instance types optimized for different use cases. Larger, more powerful instances cost more per hour.

Instance Type	vCPUs	Memory	Avg. Cost Per Hour (On-Demand, us-east-1)
t3.nano	2	0.5GB	$0.0059
m5.2xlarge	8	32GB	$0.384
r5.8xlarge	32	256GB	$2.464

As shown above, hourly instance costs can range from under $0.01 to over $2.00 depending on compute, memory, storage, and network needs.

Purchase Option

As outlined earlier, you can choose between on-demand, reserved (1-3 years), savings plans (1-3 years), spot, or dedicated hosts, with costs varying accordingly.

For ad-hoc usage, on-demand provides the most flexibility while spot instances offer the deepest cost savings of up to 90% for interruptible workloads.

Region and Availability Zone

AWS pricing varies across different geographic regions and availability zones (data centers). In general:

• US East regions offer lower prices
• Asia Pacific and Europe prices are moderately higher
• Newer regions tend to have higher costs

For example, here are on-demand m5.xlarge costs across regions:

• US East (N. Virginia) – $0.192 per hour
• Europe (Ireland) – $0.22 per hour
• Asia Pacific (Sydney) – $0.272 per hour

So launching instances in US East can provide significant savings over other regions.

EBS Storage

Amazon Elastic Block Store (EBS) provides block-level storage volumes for EC2 instances. General-purpose EBS SSD storage costs $0.10 per GB per month.

Other EBS volume types like throughput-optimized or cold HDD range from $0.045 to $0.125 per GB per month.

EBS storage optimally suits OS disks and applications requiring consistent IOPS performance.

S3 Storage and Data Transfer

Amazon Simple Storage Service (S3) offers highly-durable object storage. Standard S3 storage costs between $0.023 – $0.025 per GB per month, with slightly lower prices in us-east-1.

You might also like our articles about the cost of Adobe Marketing Cloud, building an app, or building a website.

S3 Standard-Infrequent Access and Glacier offer discounted archival storage starting at $0.01 per GB per month.

Data transfer costs are also important for cloud workloads:

• Data transfer into S3: No charge
• Data transfer out to internet: $0.09 per GB
• Data transfer between availability zones: No charge
• Data transfer between AWS regions: $0.02 per GB

So minimizing internet data transfer can yield substantial savings at scale.

Load Balancing

Elastic Load Balancing routes traffic across multiple EC2 instances. Pricing is based on:

• Load balancer hours
• Consumed LCUs (Load Balancer Capacity Units)

A simple ELG load balancer costs around $0.008 per hour plus $0.008 per LCU hour consumed. For complex multi-region load balancing, costs can exceed $0.15 per hour.

Auto Scaling

Auto Scaling allows automatically launching or terminating EC2 instances based on defined triggers to maintain workload availability and optimize costs.

There is no direct charge for Auto Scaling itself, but the EC2, ELB, and other resource usage incurred does accrue costs.

Intelligently scaling instances up or down to match workload demand is key to maximizing efficiency and savings.

Estimating Real-World AWS Costs

To better understand real-world costs, let’s break down example monthly estimates across three common use cases:

1. Small Business Website

• 2 x t3.medium instances (2 vCPU, 4GB RAM)
• 50GB EBS storage
• 100GB data transfer
• 1x Elastic IP

Component	Cost
EC2 instance	2 x $34.56
EBS storage	50 GB x $0.10/GB
Data transfer	100 GB x $0.09/GB
Elastic IP	2 x $0.005 per hour
Total per month	$86

This small business can run a simple website for around $86 per month using two t3.medium instances and minimal storage.

2. E-Commerce Website

• 3 x c5.2xlarge instances (8 vCPU, 16GB RAM) – Compute-optimized
• 500GB EBS SSD storage
• 5000GB (5TB) data transfer
• Multi-region Classic Load Balancer

Component	Cost
EC3 instances	3 x $312.00
EBS storage	500GB x $0.10/GB
Data transfer	5000GB x $0.09/GB
Load balancer	$0.11/hr x 730 hours
Total per month	$1,500

This mid-sized e-commerce site would cost around $1,500 per month for three c5.2xlarge instances optimized for web application performance.

3. Video Encoding Service

• 4 x g4dn.2xlarge instances – GPU instances for video encoding
• 1 TB EBS SSD storage
• 10,000 GB (10 TB) data transfer
• CloudFront CDN distribution

Component	Cost
EC2 instances	4 x $832.00
EBS storage	1000 GB x $0.10/GB
Data transfer	10,000 GB x $0.09/GB
CloudFront	4 TB data x $0.085/GB
Total per month	$4,500

A video encoding platform with GPU instances, substantial network usage, and CloudFront delivery might cost over $4,500 per month.

These examples illustrate how costs scale across instance types, storage, and networking resources based on workload requirements.

Five Cost Optimization Strategies

Here are some best practices to maximize efficiency and reduce waste when using AWS:

1. Choose Reserved Instances for Steady-State Usage – The largest savings come from reserving instances for 1-3 years rather than paying hourly on-demand rates. For base capacity that you continuously run like production web servers, reserved instances can cut costs by up to 72% compared to on-demand.

2. Scale Resources Up and Down Based on Demand – Proactively scale in/out your AWS resource usage to closely align with workload demand instead of running over-provisioned capacity 24/7. Services like Auto Scaling make this seamless.

3. Use EC2 Spot Instances for Flexible Workloads – Leverage EC2 spot instances to potentially reduce costs by up to 90% for batch jobs or other non-critical workloads that allow for flexibility.

4. Select Instance Sizes and Features Optimized for Your Needs – Choose instance families aligned with your workload patterns – don’t just default to m5.xlarge for everything. Right-size CPU, memory, storage and GPU resources based on data.

5. Analyze Spend Trends and Forecast Usage – Use Cost Explorer to visualize spend patterns over time. Gauge monthly and annual projections based on product and resource consumption. This enables proactive planning.

Considerations for Estimating AWS Costs

Beyond core infrastructure, additional factors influence your overall AWS spend:

• Managed services like RDS, Redshift, ElastiCache, and more entail hourly usage fees that add up.
• Ingesting/analyzing data in services like Kinesis, Glue, Athena, and Quicksight incurs additional charges.
• Networking costs like CloudFront CDN, Direct Connect, VPC peering, NAT Gateways, and Route 53 accumulate.
• Security services like GuardDuty or Macie raise monthly costs but provide protection.
• Storage tiers like S3 Standard vs S3 Glacier have 10x cost differences.
• Geographic redundancy for multi-region durability and lower latency comes at a premium.
• Overprovisioning resources or maintaining unused capacity bloats spend.
• Inefficient data pipelines and workflows waste resources.
• Lack of spend visibility and ownership enables unchecked usage growth.

Modeling total usage across all critical services is vital for accurate budgeting, not just core EC2 infrastructure.

AWS Pricing Models and Tools

AWS provides several key tools to estimate costs and optimize spending:

AWS Pricing Calculator – Builds itemized cost estimates based on your projected usage. Helpful early on for budgeting.

AWS Cost Explorer – Analyzes historical spend trends, tracks daily/monthly costs, and provides spend forecasts. Essential for cost management.

AWS Budgets – Sets custom cost and usage thresholds with alerts when hit. Useful for controlling expenses.

Cost Allocation Tags – Tags enable granular visibility into AWS costs and usage by business unit, project, or dimension.

AWS Reserved Instance Planner – Identifies target workloads for reserved instances to reduce waste and over-provisioning.

AWS Trusted Advisor – Flags underutilized resources and low-hanging fruit savings opportunities.

Integrating these tools into your workflows will enable data-driven visibility and management of AWS investments.

Answers to Common Questions

How much does Amazon EC2 cost per month?

The monthly cost varies significantly based on instance type, use case demands, region used, and pricing model chosen. Small t3.micro instances can run for $5-15 per month. High-performance production workloads with c5.xlarge instances, EBS storage, and heavy data transfer can reach over $3,000 per month. Planning via the AWS pricing calculator is advised.

What is the cheapest AWS EC2 instance type?

The t3.nano ($0.0059 per hour) and t3.micro ($0.0104 per hour) are the cheapest instance types. But these offer limited resources for many real-world workloads. The t3.small ($0.0208 per hour) often provides the best blend of value and performance for small apps.

How can I estimate my monthly AWS bill?

Use AWS Cost Explorer and the pricing calculator to model expected resource consumption across EC2, RDS, Lambda, CloudFront and other services. Build in projections for traffic, storage and data transfer growth. Look at historical usage trends. Talk with engineers to align estimates with roadmap plans. Plan upper and lower bounds for budgeting.

Should I choose reserved instances or savings plans?

Reserved instances provide the largest discounts if you have consistent EC2 usage patterns forecasted for 1-3 years. Savings plans offer more flexibility across multiple services, but don’t discount EC2 as deeply as RIs. Evaluate your workload predictability and breadth of services used to determine the best fit.

Final Words

With a data-driven approach to forecasting spend, companies can confidently scale AWS usage while controlling cloud bills. Reach out to your account manager or AWS solutions architect to further discuss the right pricing models and instance configurations tailored to your workloads.