From the course: AWS: Cost and Performance Optimization

Cost allocation tags - Amazon Web Services (AWS) Tutorial

From the course: AWS: Cost and Performance Optimization

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Cost allocation tags

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- [Instructor] Let's begin this course by talking about cost allocation tags. One of the prominent forces behind the widespread adoption of the cloud has been its dynamic nature and flexibility. In a matter of minutes, it is possible to deploy a solution from scratch. While this makes the cloud attractive, it also presents a challenge for cloud administrators, managing costs. Administrators find it challenging to track usage across different organization segments such as departments, cost centers, and projects. Cost allocation tags provide a solution to this problem. A tag is a label that you assign to your resources. Essentially, it's a key-value pair. As an example, here are some tags applied to an EC2 instance. Project is App 1, Cost Center is 10012, Department is Engineering, and Name is Windows Server WS1. When configured correctly, tags can be used to organize efficiently, search for, and filter your resources. You can also use tags to track your costs on a detail level. Such tags are known as cost allocation tags. AWS will use the configured cost allocation tags to organize and categorize your resource costs on your cost allocation report. Here is an example of a cost allocation report. As you can see, the report shows the total cost across different tags for each billing period. If you have untagged resources, AWS will also include them in the report. Since this is a CSV report, you can apply filters to make the data more actionable for you. For cost allocation tags to work effectively, there's a couple of items to bear in mind. First, you should configure your resources with the required tags. Second, you should designate tags that you intend to use for cost allocation purposes as cost allocation tags in the Billing and Cost Management console. AWS will include them in your billing data. When you begin exploring the usage of cost allocation tags, a natural question is how should you plan the tags? What criteria should you use to build tags? AWS recommends looking at your current IT financial reporting practices for guidance around building your tags. This will provide insights into the various dimensions you can include in your tags such as cost center, department, location, application owner, business unit, and more. By aligning your cost allocation tags with your financial reporting dimensions, you'll be able to streamline your cost reporting and cost management. AWS also recommends having a consistent tagging approach and tagging all resources that support their use. If a significant portion of your resources is untagged, your cost reporting could be inaccurate. Most resource types support tagging. By tagging them, you can bring them under your cost reporting. Tagging your resources has cost management benefits and could be the difference between an unexpected charge on the bill and a clearly allocated cost management structure. In the upcoming videos, we'll explore the different types of cost allocation tags.

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