Cloud Costs
Cloud infrastructure represents the second-largest operating expense for most organizations after salaries, with studies suggesting up to 30% of cloud spend goes to waste. That's not a typo—nearly a third of your cloud budget is effectively lighting money on fire.
The challenge? Most teams treat cloud cost optimization as a single problem when it's actually two very different disciplines.
At Archera, we work with thousands of organizations optimizing costs across AWS, Azure, and Google Cloud. We've seen brilliant engineering teams nail usage optimization only to hemorrhage money on rate optimization—or vice versa. This post explores both disciplines and how our platform helps organizations master the complexities of rate optimization.
Usage optimization is straightforward: stop paying for stuff you don't use. Yet somehow, those dev environments (burning $10K/month that nobody has logged into since Q2) are still running.
“You pay for a Ferrari when your workload is driving to the grocery store.”
While usage optimization reduces quantity consumed, rate optimization reduces the price per unit at the billing layer. This is our specialty at Archera. Buckle up.
Commitment-based discounts are the primary tools. AWS offers Reserved Instances and Savings Plans (40-72% discounts for one- or three-year commitments), as well as Private Pricing Agreements (PPA). Azure provides Reservations (up to 72% savings) and Savings Plans for Compute (up to 65% off), plus Microsoft Azure Consumption Commitments (MACC). Google Cloud offers Resource-based Committed Use Discounts (up to 70% for memory-optimized instances) and Flexible CUDs (28% for one-year, 46% for three-year commitments).
The tradeoff: commitment risk. If usage patterns change or you overcommit, you're locked into paying for capacity you don't use.
Enterprise Discount Programs (AWS EDPs/PPAs, Azure MACC, GCP enterprise agreements) provide negotiated discounts for substantial spend but require multi-year minimum commitments that carry the same risk of overcommitment.
While both approaches require discipline and expertise, rate optimization presents unique technical and financial challenges. This is where Archera focuses—helping organizations navigate the complexity of commitment-based discounts across AWS, Azure, and Google Cloud. Let me walk you through why this is so challenging and why so many smart teams get it spectacularly wrong:
AWS presents multiple instance families, dozens of sizes within each family, three payment options, two term lengths, and multiple commitment types (standard RIs, convertible RIs, EC2 instance savings plans, compute savings plans). It's like they designed the pricing structure as a choose-your-own-adventure book where every path leads to confusion.
Azure offers similar complexity with different VM series, Reservations that lock to specific instance types and regions, Savings Plans for Compute that provide flexibility across VM families, and MACC commitments that interact with both. Microsoft looked at AWS's pricing complexity and said, "hold my beer."
Google Cloud provides Resource-based CUDs tied to specific machine families and regions, and Flexible CUDs that span multiple machine families and all regions with flat-rate discounts. The good news: Google's approach is simpler. The bad news: you're still managing commitments across three different clouds with three different pricing models.
A medium-sized multicloud organization faces millions of potential commitment combinations. Or, you know, a really expensive consultant and a bottle of aspirin. That's where Archera comes in—giving your CIO and CFO the ability to have their cake and eat it too with automated and insured rate optimization.
Rate optimization depends on accurate usage forecasting, but predicting cloud infrastructure usage is notoriously difficult. New launches, architectural migrations, seasonal patterns, and market changes create uncertainty.
Here's the conversation nobody wants: "Hey Finance, remember that three-year commitment we bought last quarter based on aggressive growth projections? Yeah, about that..." What a fun conversation, explaining why the company is throwing cash on the floor and lighting it on fire.
This is exactly why Archera's 30-day Insured Commitments exist. Can't predict usage three years out? Try 30 days. You get discounts based on one or three-year rates without betting your budget on a crystal ball.
Once commitments exist, continuous monitoring is essential. On AWS, are your savings plans covering the right services? On Azure, do Reservations match deployed VM series? Is your MACC on track? On GCP, are CUDs aligned with actual machine families?
Native tools offer basic visibility but lack sophistication for proactive multicloud optimization. By the time you notice underutilization, you've accumulated wasted spend. Archera provides unified visibility and intelligent recommendations, catching issues before they become expensive.
As patterns shift, commitments must adjust. AWS allows RI conversions but it's manual with limitations, such as the total commitment amount must only go up. Azure Savings Plans can't be cancelled once purchased. GCP Resource-based CUDs can't be cancelled or modified.
Organizations end up with patchwork commitments across clouds with different expiration dates and rules, making holistic optimization nearly impossible.
Traditional commitments require multi-year terms, creating three risks:
Overcommitment: You commit to more than you need. It's like buying a gym membership you never use, except it costs six figures. And unlike your gym, the cloud provider isn't going to quietly let you slide on payments.
Under-commitment: You commit too conservatively, leaving on-demand spend unoptimized. You're saving 10% when you could save 50%, which means you're overpaying by 40%. Math is cruel. Your CFO is crueler.
Inflexibility: Infrastructure needs change, but you're locked in. That AWS commitment you bought? You just decided to migrate half your workloads to GCP. Cool. That commitment has 18 months left.
These risks cause organizations to commit far less aggressively than usage patterns would support, sacrificing significant savings. With Archera's 30-day Insured Commitments, you don't choose between aggressive savings and sleeping at night.
We've built our FinOps platform to address these challenges. Because watching organizations struggle with commitment risk while leaving millions on the table gets old fast.
Native commitments require one- or three-year terms for substantial discounts. Archera's 30-day Insured Commitments can provide savings based on one or three-year discount rates with commitment terms measured in weeks, not years. Our one-year Insured Commitments offer deeper discount than one-year native commitments.
You may think - cool, sounds great, but do I maintain ownership of my account and cloud commitments, or do you take away my autonomy and control to provide this solution?
No, we don’t take over your account. No bulk buy. No arbitrage. We do not interfere with your existing relationship with cloud providers or resellers. That’s the Archera difference.
When you purchase an Insured Commitment, Archera procures an underlying native commitment into your AWS account, Azure Tenant or Google Project on your behalf and transforms it into a short-term instrument through our insurance-backed model. You get solid savings with only 30-day obligation.
Our Moneyback Guarantee: After 30 days or 1 year, if you're not fully utilizing capacity, Archera automatically reimburses net losses. We collect a risk premium to provide this insurance, but you still achieve significant savings net of the premium when compared to on-demand rates.
We only make money when you save money—which, frankly, is how this industry should work.
Don’t want another set of vendor invoices to keep track of? No sweat. We transact 100% of the Archera risk premium through the respective cloud marketplaces– showing up on each of your cloud bills as a single line item. Use a reseller? No problem. Same behavior.
Aggressive Optimization Without Risk: Most organizations commit to 40-50% of stable usage because they're terrified of overcommitment. With Insured Commitments, push to 80-90% coverage because you'reprotected if usage drops. Higher coverage = more savings.
Dynamic Infrastructure: Team wants to migrate from EC2 to containers? Test a new database? Different region? Go ahead. With 30-day terms, you're not locked into infrastructure decisions for years.
Complementing Native Commitments: Use native three-year commitments for absolute baseline infrastructure. Layer Archera’s one-year Insured Commitments on top for medium-term. Add 30-day Insured Commitments for everything else. This three-tier approach maximizes savings while preserving flexibility at every level.
Enterprise Pricing Acceleration
Beyond Insured Commitments, Archera helps negotiate and maximize enterprise agreements—AWS EDPs/PPAs, Azure MACC, GCP enterprise agreements. Our tools model multi-year growth scenarios, building business cases for favorable terms. We provide early warning of potential shortfalls and strategies to efficiently consume remaining credits.
Here's what most organizations miss: usage and rate optimization interact in ways that wreck your budget if you get the sequencing wrong.
The common misconception: optimize usage first, then lock in commitments. Sounds logical—eliminate waste, stabilize patterns, commit.
The problem? Usage is never stable. Workloads evolve continuously. Waiting for perfect stability means paying retail prices while telling yourself you'll buy in bulk "once things settle down." Spoiler: things never settle down.
Conversely, committing before addressing usage inefficiencies locks in waste. A 50% discount on an oversized instance still costs more than a properly sized instance at on-demand rates. Congratulations, you just negotiated a great deal on something you don't need.
The solution: pursue both simultaneously. Start with baseline usage optimization, apply conservative rate optimization to stable components, and continuously refine both.
Here's how we recommend organizations approach the dual challenge of usage and rate optimization:
Phase 1: Establish Visibility (Weeks 1-2)
Connect your cloud accounts to Archera's free platform to aggregate cost and usage data across AWS, Azure, and GCP. Onboarding is easy and fast. Unlock visibility in days not months. Identify your top cost drivers, inventory existing commitments, and understand your current rate optimization coverage.
Phase 2: Stop the Bleed with 30-Day Insured Commitments (Weeks 2-3)
This is where Archera transforms your rate optimization. Begin by covering your workloads with 30-day Insured Commitments. You get three-year discount rates without the multi-year commitment risk. Start aggressive—because you're protected by our Moneyback Guarantee, you can cover far more of your usage than you ever could with traditional commitments. This immediately delivers substantial savings while you learn which workloads are truly stable and develop a plan to execute right-sizing.
Phase 3: Address Usage Waste (Weeks 4-6)
Tackle the obvious usage inefficiencies using tools like Corestack, Cloudbolt, Cloudsaver, CastAI and others. Schedule non-production environments, delete orphaned resources, migrate infrequently accessed data to lower-cost storage tiers, and rightsize egregiously oversized instances. Don’t like being in a hurry to touch unknown resources? Have peace of mind knowing that you’re saving money with Archera’s 30-day insured commitments without sacrificing flexibility or rushing with right-sizing actions.
Phase 4: Graduate to 1-Year Insured Commitments (Month 2-3)
After 30-60 days, you'll see which workloads are genuinely stable and predictable. Move those workloads from 30-day to 1-year Insured Commitments. Why? Our risk premium is lower on 1-year terms because we'retaking less risk, which means you save even more money. Keep the 30-day Insured Commitments for variable, seasonal, or experimental workloads where you need maximum flexibility.
Phase 5: Optimize Your Commitment Mix (Ongoing)
Continuously refine your portfolio. Use Archera's platform to identify opportunities to shift more workloads from 30-day to 1-year Insured Commitments as usage patterns stabilize. For your absolute baseline workloads—infrastructure you're certain won't change—consider native three-year commitments for maximum savings, with Insured Commitments covering everything else. The goal: match commitment term to confidence level, maximizing savings at every tier.
Phase 6: Continuous Rate Optimization (Operational Maturity)
Archera's platform makes ongoing optimization actually doable. Enable our fire and forget autonomous management feature with granular policy control across your cloud estate. Regular reviews identify new coverage opportunities, monitor utilization across all commitment types, and adjust strategies as your infrastructure evolves. Measure and report on unit economics to prove ROI to Finance.
Conclusion
Cloud cost optimization requires both usage and rate optimization, implemented continuously. The traditional challenge has been the brutal tradeoff between savings and flexibility. Native commitments offer substantialsavings but require multi-year terms that introduce risk. It's Sophie's choice with spreadsheets.
Archera fundamentally changes this. Our free platform provides visibility, analysis, and management for traditional commitments. Our Insured Commitments—especially the 30-day variant—eliminate the flexibility-versus-savings tradeoff entirely. Three-year discount rates. 30-day terms.
By combining systematic usage optimization with sophisticated rate optimization, organizations achieve sustainable efficiency while maintaining flexibility to innovate. The result isn't just lower bills—it's a more mature, disciplined approach that creates competitive advantage.
The question isn't whether to optimize usage or rates—it's how to optimize both simultaneously, continuously, and effectively as infrastructure evolves. Organizations that master this balance transform cost optimization from a painful financial exercise into a strategic capability.
And maybe, just maybe, you'll stop having those awkward conversations with Finance about why the cloud bill keeps going up. Though let's be honest, Finance will find something else to ask about. They always do.
I kept thinking “we have heard this cost visibility, cloud tagging and attribution story one too many times.” For me, the game changing moment was when Aran began talking about reducing risk, proactive planning, and creating a secondary marketplace.
