How AWS pricing works
AWS pricing has three fundamental dimensions. Compute is charged for the time a resource runs, typically per hour or per second for EC2 and Lambda. Storage is charged for the amount of data stored, typically per gigabyte per month for S3 and EBS. Data transfer out from AWS to the internet is charged per gigabyte. Data transfer in to AWS is free. Data transfer between services within the same Region is generally free or very low cost.
EC2 purchasing options illustrate the pricing tradeoffs. On-Demand instances charge per hour or per second with no commitment: maximum flexibility, highest per-unit price. Reserved Instances (RI) commit to a 1 or 3-year term for a specific instance type and Region in exchange for up to 75% discount. Savings Plans offer similar discounts with more flexibility: you commit to a spending level in dollars per hour rather than a specific instance type. Spot Instances use spare AWS capacity at up to 90% discount, but AWS can reclaim them with 2-minute notice.
The AWS Free Tier gives new accounts limited free usage for 12 months: 750 hours per month of t2.micro or t3.micro EC2, 5 GB of S3 storage, and other per-service limits. Always-free tier offerings include Lambda's 1 million free invocations per month and DynamoDB's 25 GB of storage, which persist beyond the 12-month window.
Cost management tools and support plans
AWS Cost Explorer visualizes your spending history over time, breaks costs down by service, Region, or tag, and provides forecasts based on past usage. It helps answer questions like: which service is driving this month's cost increase? AWS Budgets lets you set spending or usage thresholds and sends alerts when you approach or exceed them. Organizations with multiple accounts use AWS Organizations to consolidate billing and enable volume discounts across the organization.
AWS Pricing Calculator estimates costs before you deploy. You input your intended configuration (instance type, hours per month, storage size) and it generates a monthly cost estimate. This is the planning tool; Cost Explorer is the analysis tool for after-the-fact spending review.
AWS Support plans differ significantly in cost and capability. Basic Support is free and gives access to documentation and community forums only. Developer Support adds business-hours email access to Cloud Support Associates starting at $29/month. Business Support provides 24/7 phone, chat, and email with response times from one hour for production system impairment, and full access to Trusted Advisor checks. Enterprise Support adds a Technical Account Manager (TAM), 15-minute response for business-critical outages, and starts at $15,000/month.
How to choose the correct answer
On-Demand: flexible, no commitment, highest cost. Use for unpredictable or short-lived workloads.
Reserved Instances / Savings Plans: 1 or 3-year commitment, up to 75% discount. Use for steady-state, predictable workloads.
Spot Instances: cheapest, interruptible. Use for fault-tolerant batch jobs and data processing.
Cost Explorer: analyze past spending. AWS Budgets: set thresholds and alerts. Pricing Calculator: estimate future costs.
Free Tier: 12-month limited free usage for new accounts. Always-free: Lambda, DynamoDB, and others with ongoing free tier.
Support: Basic (free, docs only). Developer (email, business hours). Business (24/7, phone, 1hr for production). Enterprise (TAM, 15min, $15k+).
Data transfer: inbound to AWS is free. Outbound to internet is charged. Within same Region is generally free.