Cloud Cost Management Strategies for Australian SMBs

Cloud computing was supposed to save money. For many Australian small businesses, the reality has been different — monthly cloud bills that creep upward, unexpected charges, and the nagging feeling that you are paying for resources nobody is using.

The good news is that cloud cost management does not require complex tools or dedicated FinOps teams. With some practical strategies and regular attention, most Australian SMBs can reduce their cloud spend by 20 to 40 percent without sacrificing performance or capability.

Understanding Your Cloud Bill

Before you can optimise, you need to understand what you are paying for.

Microsoft 365 and Azure

If your primary cloud platform is Microsoft, your costs typically fall into two categories:

Per-user subscription costs (predictable):

• Microsoft 365 licences ($9 to $33 per user per month depending on plan)
• Power BI Pro licences ($14.80 per user per month)
• Additional Azure AD or security add-ons

Consumption-based costs (variable):

• Azure Virtual Machines
• Azure Storage
• Azure Virtual Desktop session hosts
• Azure Backup
• Azure networking (bandwidth, VPN gateways)

The subscription costs are straightforward. The consumption-based costs are where bill shock happens.

AWS

AWS costs are predominantly consumption-based:

• EC2 instances (virtual machines)
• S3 storage
• RDS databases
• Data transfer (particularly data egress from AWS)
• Various managed services

Common Cost Traps

Orphaned resources: Virtual machines that were created for testing or a project that finished, but nobody shut them down. They sit there, running 24 hours a day, costing money.

Oversized resources: A virtual machine provisioned with 8 CPU cores and 32 GB RAM for a workload that uses 2 cores and 4 GB on average.

Data egress charges: Moving data out of cloud platforms costs money. This catches many businesses off guard, especially when transferring large volumes of data between regions or to on-premise systems.

Premium storage for non-premium workloads: SSD storage assigned to archives or infrequently accessed data that would perform identically on cheaper storage tiers.

Unused reserved capacity: Reserved instances or reserved capacity that was purchased for workloads that have since changed or been decommissioned.

Strategy 1: Right-Size Your Resources

Right-sizing means matching your cloud resources to actual usage rather than provisioning based on guesswork or worst-case scenarios.

For Azure

Azure Advisor (free, built-in) analyses your resource usage and recommends right-sizing opportunities. Access it through the Azure portal.

Common right-sizing actions:

• Downsize virtual machines that consistently use under 40% CPU. Azure Advisor will flag these automatically.
• Switch from Premium SSD to Standard SSD for non-performance-critical workloads
• Remove or resize unused public IP addresses
• Consolidate underutilised databases

For AWS

AWS Cost Explorer and AWS Compute Optimizer provide similar recommendations:

• Downsize EC2 instances with low utilisation
• Switch from gp3 to sc1 or st1 EBS volumes for infrequently accessed data
• Use AWS Graviton instances (ARM-based) for compatible workloads — typically 20% cheaper for equivalent performance

Practical Tip

Do not right-size everything at once. Start with the largest virtual machines and work downward. A single oversized VM costing $500 per month that should be a $150 per month instance saves more than optimising ten $20 per month resources.

Strategy 2: Schedule Non-Production Resources

Not every cloud resource needs to run 24 hours a day, 7 days a week.

Development and test environments: If your business has development or staging environments in the cloud, shut them down outside business hours. Running them from 8am to 6pm weekdays (50 hours per week versus 168 hours) reduces costs by approximately 70%.

Azure Virtual Desktop session hosts: If your AVD deployment supports standard business hours, configure session hosts to start and stop based on demand. Azure provides built-in scaling plans for this.

Scheduled shutdown options:

• Azure: Use Azure Automation with runbooks to start and stop VMs on a schedule. Azure also offers “Auto-shutdown” for individual VMs.
• AWS: Use AWS Instance Scheduler or Lambda functions with CloudWatch Events to stop and start EC2 instances.

For Australian businesses, schedule resources based on Australian Eastern Standard Time (AEST/AEDT) and account for daylight saving transitions.

Strategy 3: Use Reserved Instances and Savings Plans

If you have workloads that run consistently (production servers, databases, always-on services), reserved pricing offers significant savings.

Azure Reserved Instances

• 1-year reservation: approximately 30 to 40% savings compared to pay-as-you-go
• 3-year reservation: approximately 50 to 60% savings
• Can be applied to VMs, SQL Database, Cosmos DB, and other services
• Reservations can be exchanged or refunded (with some limitations)

AWS Savings Plans and Reserved Instances

• Compute Savings Plans: 1 or 3-year commitment, flexible across instance types
• EC2 Reserved Instances: More rigid but potentially deeper discounts
• Savings of 30 to 60% depending on term and payment option

When to Reserve

Only reserve resources that you know will run consistently for the commitment period. A good rule of thumb: if a resource has been running continuously for three months and you expect it to continue, it is a candidate for reservation.

Start small. Reserve your most stable, consistently running workloads first. You can always add more reservations later.

Strategy 4: Optimise Storage Costs

Storage costs accumulate quietly. Most cloud platforms offer multiple storage tiers designed for different access patterns.

Azure Storage Tiers

• Hot: Frequently accessed data. Higher storage cost, lower access cost.
• Cool: Infrequently accessed data (accessed less than once per month). Lower storage cost, higher access cost. Minimum 30-day retention.
• Archive: Rarely accessed data (compliance archives). Lowest storage cost, highest access cost. Retrieval takes hours.

AWS S3 Storage Classes

• S3 Standard: Frequently accessed data
• S3 Infrequent Access: Less frequently accessed data, cheaper storage
• S3 Glacier: Archive storage with retrieval times from minutes to hours
• S3 Glacier Deep Archive: Cheapest option, retrieval takes 12 hours

Practical Storage Optimisation

• Move backups older than 30 days to cool or infrequent access storage
• Move compliance archives to archive or Glacier storage
• Enable lifecycle policies to automatically transition data between tiers based on age
• Delete orphaned snapshots and old VM backups that are no longer needed

For a typical Australian SMB with 1 TB of cloud storage, moving 500 GB from hot to cool storage saves approximately $5 to $10 per month. Modest per-unit, but these savings compound across your entire environment.

Strategy 5: Set Up Cost Alerts and Budgets

Prevention is better than cure. Configure cost alerts so you know about spending anomalies before the monthly bill arrives.

Azure Cost Management

1. Open Cost Management in the Azure portal
2. Create a budget for each subscription or resource group
3. Set alert thresholds at 50%, 80%, and 100% of budget
4. Configure email notifications to your IT team and finance contact

AWS Budgets

1. Open AWS Budgets in the Billing console
2. Create a cost budget for your account or specific services
3. Set threshold alerts at similar levels
4. Configure SNS notifications for email alerts

Tag Your Resources

Tagging is essential for understanding where costs are going. Apply consistent tags to every cloud resource:

• Environment: Production, Development, Staging, Test
• Department: IT, Marketing, Operations, Finance
• Project: Project name or code
• Owner: Person responsible for the resource

Tags enable cost allocation reporting, so you can see exactly how much each department, project, or environment costs per month.

Strategy 6: Review Software Licensing

Cloud licensing is often more expensive than on-premise licensing if not managed carefully.

Azure Hybrid Benefit: If you have existing Windows Server or SQL Server licences with Software Assurance, you can use them in Azure at a significant discount (up to 40% for Windows VMs, up to 55% for SQL Database). Check with your Microsoft reseller if this applies to your business.

Microsoft 365 licence optimisation: Review your licence assignments monthly. Common waste includes:

• Staff with Business Premium licences who only use email (downgrade to Basic)
• Departed employees whose licences have not been reclaimed
• Shared mailboxes incorrectly assigned a paid licence

Third-party SaaS: Review all SaaS subscriptions quarterly. Cancel services with low usage, consolidate tools with overlapping functionality, and negotiate renewals based on actual usage data.

Strategy 7: Monitor and Review Monthly

Cloud cost management is not a one-time project. Build a monthly review into your operations:

Monthly cloud cost review (30 minutes):

1. Compare this month’s spend to last month and to budget
2. Identify the top five cost increases and investigate the cause
3. Check for orphaned resources (VMs, disks, IPs with no activity)
4. Review Azure Advisor or AWS Cost Explorer recommendations
5. Verify that scheduled shutdowns are working correctly
6. Check that new resources have been tagged correctly

Quarterly deep review (2 hours):

1. Review reserved instance utilisation
2. Assess storage tier opportunities
3. Re-evaluate right-sizing recommendations
4. Review SaaS subscription usage
5. Update budget forecasts for the next quarter

Real-World Savings Example

An Australian engineering firm with 35 staff was spending $4,200 per month on Azure. After implementing these strategies:

• Right-sized three oversized VMs: saved $380 per month
• Scheduled development VMs to business hours only: saved $520 per month
• Moved old project files to cool storage: saved $45 per month
• Purchased 1-year reserved instances for production VMs: saved $560 per month
• Removed five unused Microsoft 365 licences: saved $165 per month

Total monthly savings: $1,670 (40% reduction)

New monthly spend: $2,530. These savings required approximately eight hours of work to implement and ongoing monthly reviews of 30 minutes.

Getting Started

If you have never reviewed your cloud costs, start with these three actions this week:

1. Log in to your cloud provider’s cost management console and look at your spending trend over the past six months. Identify the top cost drivers.

2. Check for orphaned resources. Look for virtual machines, disks, and other resources that have been running but are not actively used. Shut down or delete anything confirmed as unnecessary.

3. Set up a cost alert at your current monthly spend level. This ensures you are notified if costs start climbing beyond today’s baseline.

Cloud cost management is a discipline, not a project. Build it into your regular operations, and your cloud investment will deliver the savings it was supposed to from the start.