Imminent AWS changes and what they mean for your bottom line

The changes coming into effect in 2024

Aimee Manning | DEC 07, 2023

7 min read

With the cost of just about everything continuing to rise, it comes as little surprise that we’re seeing the average AWS bill increase too – even if it is by a staggering 35% year-on-year.

But while it’s crucial to understand the impact your usage is having on these soaring spend levels, it’s also important to understand the wider changes being introduced by AWS that could ultimately affect your bottom line.

So, what are these changes? When will they come into effect? And what do they mean for your business?

Here’s everything you need to know.

AWS will begin disallowing the transfer of discounted RIs

In a recent email sent to its user base, AWS announced that as of January 15, 2024, it will no longer be allowing the resale of Reserved Instances (RIs) that have been purchased at a discount.

AWS Discounted RIs Changes

But what exactly does this mean?

For many AWS users, not a lot, for the simple reason that this will only affect companies using discounted reserved instances. In other words, AWS’ highest spenders that subsequently have access to additional, bespoke discounts beyond the standard discount rate of an RI.

It will not impact those using standard reserved instances.

From the date mentioned above, eligible users will no longer be able to trade these heavily discounted RIs to other customers on the EC2 marketplace. They can still achieve these incentivised discounts, they just can’t sell them on.

And it’s a move that makes total sense.

The whole purpose of a discounting program of this kind is to reward companies that are committing to a certain amount of usage within a certain time period – typically one or three years.

By disallowing the transfer, AWS is ultimately ensuring that its customers are essentially committing to their commitments and aren’t just selling on unwanted capacity months later, often at a premium. In some ways it can be viewed as an anti arbitrage measure.

But what does this mean for companies that are impacted?

According to Vertice’s VP Cloud Engineering, Gerric Chaplin, it will simply require organizations to take a more intelligent approach to buying RIs.

“Given that AWS are understandably tightening the rules around the transfer of discounted RIs, companies will now need to think a bit more carefully about what they’re committing to, as well as their strategic goals over the commitment period.”

AWS Changes - Discounted RIs

The bottom line is that companies need a robust cloud cost optimization strategy in place to ensure that their organization is optimizing all aspects of their cloud costs, not just relying on the local optimization of a single product category and its lowest hanging fruit.

AWS will start charging for IPv4 addresses

In another move that will come into effect on February 1, 2024, AWS will begin charging its customers for public IPv4 addresses.

But what does this mean for your company and why is AWS introducing this measure?

Well the first thing to point out is that despite IPv6 being released back in the late nineties, IPv4 remains the most popular version of IP (internet protocol) across the internet.

The problem, however, is that this popularity and lack of adoption of IPv6 has resulted in the pool of IPv4 addresses becoming depleted over time, meaning that the acquisition and maintenance of these IP addresses have become more challenging and costly for cloud providers such as AWS.

To mitigate the impact of this scarcity, AWS will begin charging its customers $0.005 per IP, per hour, for all public IPv4 addresses – something that is already being done by cloud providers such as Google Cloud and Microsoft Azure. And it’s not the first change that AWS has implemented to tackle this issue.

According to Vertice’s Senior Product Manager, Kristian Roberts, “AWS has long been charging for idle Elastic IPv4’s, so the extension to charge hourly rates for both used and unused Public IPv4’s indicates that AWS really is doubling down on this policy of disincentivizing wholesale IPv4 usage”.

IPv4 changes AWS

This change has seen its fair share of condemnation, especially for those who have made long term commitments to AWS on services where IPv4 was included, under the assumption that all costs were factored in from the beginning and without having to perform extra work like switching to IPv6 to mitigate extra costs.

Ultimately, this will impact all users except those that are making use of Amazon’s BYOIP feature. In other words, those that are bringing their own publicly routable IPv4 address from their on-premises network to their AWS account.

The hope is that this change will encourage more AWS users to adopt Ipv6.

How might this affect your AWS bill?

If your organization utilizes public IPv4 in its AWS infrastructure, the introduction of charges will lead to additional expenses. Customers can particularly expect to see a change of pricing for services that currently include IPv4, for example Amazon Lightsail.

But while the exact amount will depend on the number of IPv4 addresses you use, any increase is likely to be a cause for concern given that cloud spend is already increasing by an annual average of 35%.

Being able to assess the impact this change will have on your budget is therefore imperative.

The question is, how will you be able to find out what these charges are?

From now onwards, your AWS Cost and Usage Reports will automatically include public IPv4 usage, and when this price change comes into effect, you’ll also be able to use AWS Cost Explorer to see and better understand your usage.

In addition to this, AWS has also created Public IP Insights, a new feature of Amazon VPC IP Address Manager that is available to customers at no cost to help monitor, analyze and audit their use of public IPv4 addresses.

Ultimately though, you should consider working with your tech team to identify opportunities to optimize costs. While this may involve evaluating the adoption of IPv6 and assessing the usage of your existing IPv4 addresses, for example identifying those that are unused or underutilized, there will likely be additional cost saving opportunities across your infrastructure, given that the average company wastes as much as 32% of its cloud spend.

How to mitigate the impact of rising AWS costs

While it’s entirely understandable why AWS is beginning to discourage behaviors that are impacting its margins, as a user it’s also crucial that you’re not only aware of how these changes will impact your own bottom line, but also how you can optimize your infrastructure for maximum savings.

Which is where Vertice comes in.

As a Cloud Cost Optimization Platform, we can provide you with unparalleled visibility of your usage, giving you the insights you need to more accurately forecast your spend, while also generating cost-saving recommendations that require minimal engineering effort – or that can be implemented on your behalf.

See for yourself how Vertice discovered over $1 million in AWS savings potential for one company, or alternatively learn more about the benefits of partnering with a Cloud Cost Optimization provider.

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