1. AWS Pricing Fundamentals

AWS uses a pay-as-you-go pricing model. You pay only for the resources you consume with no upfront commitments (unless you choose to commit for discounts). Understanding pricing models is critical for both cost optimization and AWS certification exams.

Three Pricing Drivers
Most AWS costs come from three things: 1) Compute: how long instances/functions run (per hour, per second, per invocation). 2) Storage: how much data you store (per GB-month). 3) Data Transfer: data moving OUT of AWS (per GB). Data IN to AWS is always FREE. Data between AZs costs money. Data between Regions costs more.

2. Data Transfer Pricing Rules

Important Warning
Data transfer costs are often the most surprising part of AWS bills. Cross-AZ traffic, NAT Gateway processing, and data out to the internet add up quickly. Key cost savers: S3 Gateway VPC Endpoint (free), CloudFront for content delivery (cheaper than direct S3), keep resources in the same AZ when possible.

3. EC2 Pricing Models

Savings Plans Types

RIs vs Savings Plans
Reserved Instances = commit to a specific instance TYPE (e.g., m5.large in us-east-1). Less flexible, but can be sold on the RI Marketplace. Savings Plans = commit to SPEND (e.g., $10/hour). More flexible — applies across families, regions, services. AWS recommends Savings Plans for most new commitments.

4. Other Service Pricing Highlights

5. AWS Free Tier

Key Free Tier Items

  1. EC2: 750 hours/month t2.micro or t3.micro (Linux + Windows). 12-month free.
  2. S3: 5 GB Standard storage + 20,000 GET + 2,000 PUT. 12-month free.
  3. RDS: 750 hours/month t2.micro or t3.micro single-AZ. 20 GB storage. 12-month free.
  4. Lambda: 1 million requests + 400,000 GB-seconds/month. Always free.
  5. DynamoDB: 25 GB storage + 25 RCU + 25 WCU. Always free.
  6. CloudWatch: 10 custom metrics + 10 alarms + 1M API requests. Always free.
  7. SNS: 1 million publishes. Always free.
  8. SQS: 1 million requests. Always free.
  9. CloudFront: 1 TB data out + 10M HTTP requests/month. 12-month free.
Important Warning
Free Tier does NOT apply to all instance types or all Regions. Going over Free Tier limits incurs charges immediately with no warning. Set up Billing Alarms in CloudWatch to alert before you exceed limits. Free Tier applies per account (not per user).
Exam Tip Pricing: "Cheapest for steady workload" = Reserved Instances or Savings Plans (up to 72%). "Cheapest for interruptible work" = Spot (up to 90%). "Most flexible commitment" = Compute Savings Plan (EC2 + Fargate + Lambda). "BYOL licensing" = Dedicated Host. "Data IN" = always free. "S3 to CloudFront" = free. "Reduce NAT costs" = S3 Gateway VPC Endpoint. Free Tier: 750 hrs t2/t3.micro EC2, 1M Lambda requests, 25 GB DynamoDB.