AWS Cost Explorer: How to Track and Reduce Expenses
As businesses grow in the cloud, one of the biggest challenges they face is controlling costs. AWS offers flexibility and scalability, but without proper monitoring, cloud expenses can rise quickly. AWS Cost Explorer is designed to help organizations visualize, understand, and optimize their cloud spending. It provides tools to analyze usage patterns, identify cost spikes, and implement strategic measures to reduce unnecessary expenses.
This guide walks you through how AWS Cost Explorer works and the best ways to use it for monitoring and cost reduction.
Understanding AWS Cost Explorer
AWS Cost Explorer is a native tool provided by Amazon Web Services that helps users track, analyze, and manage their cloud spending. It provides graphical reports, cost breakdowns, forecasts, and actionable insights to help businesses optimize cloud budgets.
Key benefits include:
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Real-time visibility into spending
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Cost and usage trends across accounts and services
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Forecasting future cloud expenses
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Identifying anomalies and cost spikes
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Recommendations for savings opportunities
AWS Cost Explorer is accessible through the AWS Management Console and integrates with other cost management tools such as AWS Budgets and AWS Cost Anomaly Detection.
Getting Started with AWS Cost Explorer
Before diving into optimization, you must first enable Cost Explorer in your AWS account. Once enabled, it begins collecting and presenting cost and usage data.
To access AWS Cost Explorer:
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Log in to the AWS Management Console
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Go to Billing and Cost Management
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Select Cost Explorer and activate it
After activation, AWS populates historical data for up to the last 12 months, allowing immediate analysis.
Key Features of AWS Cost Explorer
AWS Cost Explorer provides numerous features that guide smarter cost decisions. Some of the most valuable features include:
Cost and Usage Reports
These reports show:
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Which services contribute most to your bill
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Cost broken down by region, account, and tags
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Monthly, daily, or hourly trends
This visibility makes it easier to detect unusual usage or rising costs.
Granular Filtering
Users can filter spending by:
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AWS service
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Linked account
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Region
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Usage type
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Tags such as “Environment: Production” or “Team: Marketing”
Tags are especially important for analyzing departmental or project spending.
Reserved Instances and Savings Plan Insights
Cost Explorer shows:
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Current savings from Reserved Instances or Savings Plans
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Unused reservations
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Suggestions for future purchases
This helps maximize long-term discounts.
Forecasting
Forecasting uses machine learning to predict expected cloud costs for the next 3 to 12 months. It helps businesses with budgeting and planning.
Tracking AWS Spending
Monitoring spending is the first step to optimizing it. AWS Cost Explorer offers multiple views to track usage effectively.
Service-Level Tracking
Understand where cloud costs originate. For instance:
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EC2 compute instances
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S3 storage usage
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Data transfer costs
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Lambda function execution
This breakdown helps identify expensive services requiring optimization.
Account-Level Tracking
In organizations using AWS Organizations, costs may be shared across multiple accounts. Cost Explorer consolidates these for better multi-account analysis.
Tag-Based Tracking
Tagging allows business units, projects, or teams to monitor their budgets. For example:
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“Project: MobileApp”
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“Team: DevOps”
This allows accountability and transparency at every level.
Cost Optimization Strategies Using AWS Cost Explorer
Once you identify your spending patterns, the next step is reducing costs. Cost Explorer provides valuable insights to guide decision-making.
Right-Sizing Resources
Many workloads run on oversized compute resources. Cost Explorer highlights:
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Under-utilized EC2 instances
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Low-usage RDS databases
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Idle load balancers
Right-sizing helps match resources to actual usage.
Using Reserved Instances or Savings Plans
For steady workloads, AWS Savings Plans and Reserved Instances offer up to 72 percent savings. Cost Explorer provides purchasing recommendations based on usage history.
Identify Idle or Unused Resources
You may discover running services that bring little to no value but still incur charges. Examples include:
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Unused EBS volumes
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Idle NAT Gateways
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Unattached Elastic IPs
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Old snapshots
Regularly reviewing usage reports ensures waste is eliminated.
Optimize Data Transfer Costs
Data transfer charges can be unexpectedly high. Cost Explorer can highlight areas where:
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Too much cross-region traffic exists
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Applications require architectural adjustments
Using CloudFront or PrivateLink can reduce these costs.
Use AWS Cost Anomaly Detection
Unexpected cost spikes can occur due to misconfigurations, usage bursts, or cyber issues. AWS Cost Anomaly Detection uses machine learning to identify anomalies and alerts you when spending deviates from normal patterns.
Businesses can:
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Set alert thresholds
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Define detection rules
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Monitor cost anomalies per team or service
This ensures cost issues are caught early before they cause billing surprises.
Combine Cost Explorer with AWS Budgets
For proactive cost control, combining Cost Explorer with AWS Budgets works effectively.
AWS Budgets allows setting custom budgets based on actual or forecasted usage. Alerts are sent through email or SNS when spending is about to exceed defined limits. For example:
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Monthly S3 budget of $200
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Alert at 75 percent and 90 percent thresholds
This helps businesses stay within budget.
Best Practices for Using AWS Cost Explorer
To maximize the value of Cost Explorer, follow these best practices:
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Enable detailed cost allocation tags for all resources
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Review cost and usage reports weekly
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Check RI and Savings Plan coverage and utilization
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Use cost allocation across teams and projects for accountability
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Schedule monthly cost optimization reviews
Final Thoughts
AWS Cost Explorer is a powerful tool for tracking and optimizing cloud spending. It gives businesses visibility, control, and insights needed to avoid waste and plan cloud budgets effectively. By leveraging detailed reports, forecasting, anomaly detection, and cost optimization suggestions, organizations can reduce unnecessary expenses and make more informed decisions.
When used regularly, AWS Cost Explorer helps maintain a cost-efficient cloud architecture, making it valuable for both small businesses and large enterprises. Combining it with optimization practices and AWS budgeting tools ensures long-term cost savings and smarter cloud investments.
