AWS Cost Forecast & Rightsizer
Forecast AWS spend and calculate savings from Savings Plans and Reserved Instances. Enter values for instant results with step-by-step formulas.
Formula
Cost = (CommittedSpend × (1 - DiscountRate)) + (ExcessUsage × OnDemandRate)
We project your growth to estimate total On-Demand spend. Then we apply the Savings Plan discount to the percentage of usage you choose to cover (e.g., 80%). Any usage above that coverage target is billed at standard On-Demand rates.
Worked Examples
Example 1: Startup Growth
Problem:$10k/mo, 5% MoM Growth, 1yr Partial Upfront (30% off)
Solution:Forecast On-Demand: ~$159k. With SP: ~$125k.
Result:$34k Annual Savings
Example 2: Stable Enterprise
Problem:$50k/mo, 0% Growth, 3yr All Upfront (55% off)
Solution:Forecast OD: $600k. With SP: $270k.
Result:$330k Annual Savings
Frequently Asked Questions
Does this forecast Storage (S3) costs?
No, AWS Cost Forecast & Rightsizer focuses on Compute (EC2/Fargate/Lambda) where Savings Plans apply. S3 has its own tiering logic (Intelligent Tiering).
How accurate is the forecast?
It uses a simple compound monthly growth rate (MoM). Real cloud spend is often spiky. Use this for directional budgeting, not exact accounting.
How do I forecast revenue?
Bottom-up forecasting multiplies expected units sold by price. Top-down starts with market size and estimates market share. For existing businesses, use historical growth rates with adjustments. For SaaS: Forecast MRR = Current MRR + New MRR - Churned MRR + Expansion MRR. Always model best, expected, and worst case scenarios.
How do I calculate customer acquisition cost (CAC)?
CAC = Total Sales and Marketing Expenses / Number of New Customers Acquired in that period. Include all related costs: advertising, salaries, tools, commissions, and overhead. CAC payback period = CAC / Monthly Gross Margin per Customer. A payback period under 12 months is generally healthy for SaaS businesses.
Background & Theory
FinOps Fundamentals
Cloud cost management (FinOps) is about balancing Speed, Cost, and Quality. Savings Plans are the primary lever for Cost without sacrificing Speed or Quality.
Rightsizing Strategy
The goal isn't to cover 100% of usage. Usage fluctuates. A "Waterline" strategy involves:
- Base Load: Covered by 3-Year Savings Plans (Max discount).
- Predictable Growth: Covered by 1-Year Savings Plans (Flexibility).
- Variable Spikes: On-Demand or Spot Instances.
Payment Options
- All Upfront: Capital-intensive but max ROI. Good for cash-rich companies.
- Partial Upfront: Balance of cash flow and discount. Usually 50% down.
- No Upfront: Pure OpEx. Zero risk to cash balance, but lower total savings.
Why Forecast?
Cloud spend typically compounds. A $10k bill growing at 5% MoM becomes $18k/month in a year. Committing to a Savings Plan based on *today's* spend might leave you under-covered in 6 months. This calculator helps you see that gap.
History
The On-Demand Era
When AWS launched EC2 in 2006, the revolutionary idea was "pay for what you use." This On-Demand model killed the need for upfront capital expenditure (CapEx) on servers. However, as scale grew, the convenience premium became expensive.
Reserved Instances (2009)
To help customers lower bills, AWS introduced Reserved Instances (RIs). You committed to a specific instance type (e.g., m3.large) in a specific region (us-east-1) for a term. It saved money but was operationally painful. If you changed instance families, your RI was wasted.
Savings Plans (2019)
AWS solved the flexibility problem with Savings Plans. Instead of committing to *hardware*, you commit to *spend* (e.g., $5/hour). This automatically applies to any instance family, size, or region (for Compute SPs). This decoupled financial planning from engineering choices, creating the modern FinOps standard.
Common Misconceptions
- Myth: "I need to assign Savings Plans to servers." Reality: AWS applies them automatically to the usage that yields the highest discount.
- Myth: "Spot is always cheaper." Reality: Spot is cheaper, but SPs are guaranteed availability. Use SP for base load, Spot for fault-tolerant bursts.