Why AWS is more cost effective than traditional data centres

Business evolution is happening faster than ever. Enterprises are continuously experimenting with new strategies to outperform their competitors. Choosing AWS over data centres is one such strategic change which most of the organizations are working on to gain significant business value. Building your own data centre and maintaining it is undoubtedly a huge cost and greater responsibility compared to a cloud solution. But the real advantage of using AWS is not in immediate hardware cost savings. Through this article, let’s talk about AWS cost effectiveness over traditional data centres.

Lower TCO (Total Cost of Ownership)

For a large scale company, technological advancement is always a huge investment. So, when choosing among alternatives in a significant purchasing decision, companies will always consider the long-term price rather than the short-term price. In other words, they will assess the operating cost of a product/solution in addition to the purchase price. If an item has a lower TCO, it is much more suitable for the long run.

Adopting cloud services is not just deploying your applications into a cloud environment. Users have to refactor organizational operations and leverage its key resources accordingly. In a cloud environment, the service provider is responsible for most of the computational infrastructure like Servers, Storage, Databases, etc. So, users don’t have to worry about the system’s maintenance, administration, risks related to resource availability and security in comparison to hosting data centres in their own premises.

AWS resources are 24×7 available in the cloud and their cloud data system has potentially unlimited capacity. Therefore, users can have what they need, as soon as they need it. So the cost and time it takes to run experiments and develop applications are significantly lower. It increases the efficiency of the staff where developers can set up servers, create databases and deploy new storage within a few minutes. Since the application development teams have less burden upon infrastructure, they can utilize their time and effort on the business logic more productively. Consequently, it increases speed and agility of operation, increasing the performance of employees. As a result of that, companies can reduce IT infrastructure staff or appoint excess workforce to tasks where there’s a shortage in manpower.

AWS increases business agility, where users can select services according to their existing business requirements, and also allows flexibility to adopt new services or scale existing services up or down quickly on demand. Therefore, organizations can reduce migration cost and have greater extensibility. Likewise, AWS reduces the cost of operation significantly in comparison to traditional data centres which leads to lower TCO.

how moving to cloud can increase ROI

Flexible pricing

AWS provides multiple pricing models allowing flexible pricing options for the buyers, making production decisions more flexible. Companies don’t have to bind to a long-term contract or obtain complex licensing when using AWS. They can register and start using services right away and pay only for what they consume. And they can stop using any service whenever they are no longer required, without a termination fee.

Each AWS service stands individual pricing criteria with clear transparency. Users can select exactly what they need as a service, and pay only for that – and only for its consumption. Experiencing AWS cost effectiveness, users can try their free tier and run experimental projects in the cloud environment before actually paying for the resources. Therefore, organizations can overcome procurement complexities and production limitations and stay more focused on innovative ideas.

As the market leader, AWS has a large customer base. Organizations from all kinds of business sizes and industries join AWS, which leads to achieving massive economies of scale. As part of their business model, AWS transfers that benefit of economies of scale to their customers as the pay-as-you-go model where customers can have a lower variable cost.

Variety of Cost Optimization Techniques

As a benefit of AWS cost effectiveness, users can consume services according to their requirements under pay-as-you-go model without overprovisioning. They can also minimize cost by running multiple service options without losing quality or performance. AWS provides a variety of discounted pricing options for storage consumption and bulk data transfer for high volume projects. So, rather than using an On-Demand capacity, users can also reserve instances for service like Amazon RDS and Amazon EC2, where they can have a significant advantage in cost with the discount offerings.

AWS cloud also offers EC2 Spot instances which have unused compute capacity. Organizations can have an excessive discount when buying such spare instances compared to the On-Demand pricing, and reduce their application operational cost.

By using Amazon CloudWatch, users can monitor resource utilization and performance of their applications.  And also schedule alarms to automatically trigger actions to prevent over-provisioning of resources – which allows users to stick to their budget.  They can create resource groups including scalable AWS resources and assign them to a scaling plan using AWS Auto Scaling (enabled by Amazon CloudWatch). Therefore, users can configure and manage the scaling of those resources and how they collectively react to the increases or reductions in demand. And also, this can automatically remove unnecessary resources to avoid overspending.

Organizations can try AWS Trusted Advisor tool which provides proactive recommendations to improve their AWS environment and guide them with cost-effective best practices. It advises users with opportunities that will save their money, along with estimated cost reductions. AWS Cost Explorer allows users to analyze the usage and cost of their AWS resources. Furthermore, it allows identifying trends and forecasting on their infrastructure capacity needs. It also allows users to create resource groups according to their business structure where they can map their resources and workloads to the appropriate cost center.


Nowadays most of the enterprises migrate from traditional data centres to AWS to gain efficiencies and make their business more competitive. AWS Cost effectiveness is a key factor that concerns those enterprises among the other business benefits. With lower TCO, flexible pricing options and cost optimization solutions, AWS has been able to provide highly economical solutions for a variety of customer needs.