Cloud Cost Optimization Calculator

A framework and formulas for estimating cost savings from common cloud optimization initiatives.

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Overview

This calculator helps you estimate potential savings from cloud cost optimization. Use it to:

• Prioritize optimization efforts by potential impact
• Build business cases for optimization investments
• Track savings from implemented optimizations
• Set realistic savings targets

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Optimization Categories

1. Right-Sizing

Adjusting resource allocations to match actual usage.

Typical Savings: 20-40% on affected resources

Formula

Annual Savings = (Current Cost - Optimized Cost) × 12

Where:
- Current Cost = Monthly cost of oversized resources
- Optimized Cost = Monthly cost after right-sizing

Right-Sizing Worksheet

Resource	Current Size	Current Monthly Cost	Recommended Size	New Monthly Cost	Monthly Savings
VM-001	D8s_v3	$280	D4s_v3	$140	$140
VM-002	E16s_v3	$600	E8s_v3	$300	$300
DB-001	32 vCores	$2,400	16 vCores	$1,200	$1,200
Total		$3,280		$1,640	$1,640

Annual Savings: $19,680

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2. Reserved Instances / Savings Plans

Committing to 1-3 year terms for discounts.

Typical Savings: 30-72% vs. on-demand

Formula

Annual Savings = On-Demand Annual Cost × Discount Rate × Coverage Rate

Where:
- On-Demand Annual Cost = Current annual spend eligible for reservation
- Discount Rate = RI/SP discount (e.g., 0.40 for 40% off)
- Coverage Rate = % of eligible workloads covered (e.g., 0.80 for 80%)

Reserved Instance Calculator

Resource Type	Monthly On-Demand	Eligible %	1-Year RI Discount	Monthly Savings
Compute	$50,000	70%	35%	$12,250
Database	$20,000	80%	40%	$6,400
Storage	$10,000	60%	25%	$1,500
Total	$80,000			$20,150

Annual Savings: $241,800

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3. Spot/Preemptible Instances

Using interruptible capacity for fault-tolerant workloads.

Typical Savings: 60-90% vs. on-demand

Formula

Monthly Savings = Eligible Workload Cost × (1 - Spot Price / On-Demand Price)

Where:
- Eligible Workload Cost = Cost of workloads that can tolerate interruption
- Spot Price = Current spot pricing (typically 60-90% off)

Spot Instance Opportunity

Workload	Monthly On-Demand	Spot Eligible	Spot Discount	Monthly Savings
Batch Processing	$8,000	100%	70%	$5,600
Dev/Test	$12,000	80%	65%	$6,240
CI/CD Runners	$5,000	100%	75%	$3,750
Total	$25,000			$15,590

Annual Savings: $187,080

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4. Storage Optimization

Tiering, lifecycle policies, and cleanup.

Typical Savings: 30-70% on storage costs

Storage Optimization Calculator

Optimization	Current Cost	Action	New Cost	Monthly Savings
Delete orphaned disks	$3,000	Remove unattached	$0	$3,000
Tier to cool storage	$10,000	Move infrequent access	$3,000	$7,000
Tier to archive	$5,000	Move rarely accessed	$500	$4,500
Enable compression	$8,000	Compress backups	$4,000	$4,000
Total	$26,000		$7,500	$18,500

Annual Savings: $222,000

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5. Scheduling (Start/Stop)

Shutting down non-production resources outside business hours.

Typical Savings: 65-75% on scheduled resources

Formula

Monthly Savings = Resource Cost × (Non-Business Hours / Total Hours)

Where:
- Non-Business Hours = Hours resources can be stopped (e.g., 128/week)
- Total Hours = Hours in a week (168)

Scheduling Opportunity

Environment	Monthly Cost	Stop Window	% Savings	Monthly Savings
Development	$15,000	Nights + Weekends	70%	$10,500
Testing	$10,000	Nights + Weekends	70%	$7,000
Demo	$5,000	Nights only	40%	$2,000
Total	$30,000			$19,500

Annual Savings: $234,000

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6. License Optimization

Optimizing software licensing costs.

License Optimization Checklist

Item	Current Annual Cost	Optimization	New Annual Cost	Annual Savings
SQL Server licenses	$120,000	Use Azure Hybrid Benefit	$48,000	$72,000
Windows licenses	$80,000	Use Azure Hybrid Benefit	$32,000	$48,000
Unused licenses	$40,000	Remove	$0	$40,000
Over-licensed VMs	$60,000	Right-size	$30,000	$30,000
Total	$300,000		$110,000	$190,000

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Savings Summary Template

Current State

Category	Monthly Cost	Annual Cost
Compute	$	$
Database	$	$
Storage	$	$
Network	$	$
Licensing	$	$
Other	$	$
Total	$	$

Optimization Opportunities

Initiative	One-Time Effort	Monthly Savings	Annual Savings	ROI
Right-sizing	hrs	$	$
Reserved instances	hrs	$	$
Spot instances	hrs	$	$
Storage optimization	hrs	$	$
Scheduling	hrs	$	$
License optimization	hrs	$	$
Total	hrs	$	$

Projected Savings

Timeframe	Cumulative Savings
3 months	$
6 months	$
12 months	$

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ROI Calculator

Optimization Investment ROI

ROI = (Annual Savings - Implementation Cost) / Implementation Cost × 100

Payback Period = Implementation Cost / Monthly Savings

Example

Item	Value
Implementation effort	200 hours
Loaded cost per hour	$150
Implementation cost	$30,000
Monthly savings	$15,000
Payback period	2 months
First-year ROI	500%

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Tracking Template

Monthly Savings Tracker

Month	Projected Savings	Actual Savings	Variance	Notes
Jan	$	$
Feb	$	$
Mar	$	$
Q1 Total	$	$
Apr	$	$
May	$	$
Jun	$	$
Q2 Total	$	$

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Common Benchmarks

Use these benchmarks to sanity-check your estimates:

Metric	Typical Range
Overall optimization potential	20-35% of spend
Right-sizing savings	20-40% of compute
RI/SP coverage goal	70-80% of steady-state
Spot adoption potential	20-40% of compute
Storage waste	15-30% of storage spend
Non-prod scheduling savings	50-70% of non-prod

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Next Steps

1. Assess current spend by category
2. Identify quick wins (orphaned resources, scheduling)
3. Calculate potential savings using this framework
4. Prioritize by ROI and implementation effort
5. Implement and track actual savings

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For cloud cost optimization assessment, contact our team.