Understanding Consolidated Bills
If you manage an organization in Amazon Organizations, you can use consolidated billing to view aggregated usage costs for accounts in the organization. Consolidated billing can also help you reduce those costs. For example, to ensure that you pay the lowest available prices for Amazon products and services, Amazon offers pricing tiers that reward higher usage with lower prices and discounted rates for purchasing instances in advance (known as reservations or Reserved Instances). Using consolidated billing, you can combine usage from multiple accounts into a single invoice, allowing you to reach the tiers with lower prices faster. You can also apply unused reservations from one account to another account's instance usage.
Topics
Calculating Consolidated Bills
In an organization, the management account is responsible for paying all charges that the member accounts incur. If you're an administrator of a management account and you have the appropriate permissions, you can view aggregated usage costs for Reserved Instance discounts and volume tiering for all member accounts. You can also view the charges that individual member accounts incur, because Amazon creates a separate bill for each member account based on that account’s usage. Amazon also includes invoice summaries for each account in the management account invoice. During each billing period, Amazon calculates your estimated charges several times each day so that you can track your costs as your organization incurs them. Your bill is not finalized until the beginning of the next month.
Note
Like member accounts, a management account can incur usage charges. However, as a best practice you shouldn't use the management account to run Amazon services. An exception is for services and resources that are required to manage the organization itself. For example, as part of managing your consolidated billing you might create an S3 bucket in the management account to store Amazon Cost and Usage Reports.
Pricing Tiers
Some Amazon services are priced in tiers, which specify unit costs for defined amounts of Amazon usage. As your usage increases, your usage crosses thresholds into new pricing tiers that specify lower unit costs for additional usage in a month. Your Amazon usage is measured every month. To measure usage, Amazon treats all accounts in an organization as a single account. Member accounts don't reach tier thresholds individually. Instead, all usage in the organization is aggregated for each service, which ensures faster access to lower-priced tiers. As each month begins, your service usage is reset to zero.
Each Amazon service publishes its pricing information independently. You can access all
individual pricing pages from the Amazon
Pricing
Reserved Instances
Amazon also offers discounted hourly rates in exchange for an upfront fee and term contract.
Zonal Reserved Instances
A Reserved Instance is a reservation that provides a discounted hourly rate in
exchange for an upfront fee and term contract. Services such as Amazon Elastic Compute Cloud (Amazon EC2
When you reserve capacity with Reserved Instances, your hourly usage is calculated at a discounted rate for instances of the same usage type in the same Availability Zone.
Regional Reserved Instances
Regional Reserved Instances don't reserve capacity. Instead, they provide Availability Zone flexibility and in certain cases instance size flexibility. Availability Zone flexibility allows you to run one or more instances in any Availability Zone in your reserved Amazon Region. The Reserved Instance discount is applied to any usage in any Availability Zone. Instance size flexibility provides the Reserved Instance discount to instance usage regardless of size, within that instance family. Instance size flexibility applies to only regional Reserved Instances on the Linux/Unix platform with default tenancy. For more information about regional Reserved Instances, see Reservation Details in the Cost and Usage Reports Guide in this documentation and Applying Reserved Instances in the Amazon Elastic Compute Cloud User Guide for Linux Instances.
Calculating Costs for Amazon EC2 with Reserved Instances
Amazon calculates the charges for Amazon EC2 instances by aggregating all the EC2 usage for a specific instance type in a specific Amazon Region for an organization.
Calculation Process
Amazon calculates blended rates for Amazon EC2 instances using the following logic:
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Amazon aggregates usage for all accounts in an organization for the month or partial month, and calculates costs based on unblended rates such as rates for On-Demand and Reserved Instances. Line items for these costs are created for the management account. This bill computation model attempts to apply the lowest unblended rates that each line item is eligible for. The allocation logic first applies Reserved Instance hours, then free tier hours, and then On-Demand rates to any remaining usage. In the Amazon Cost and Usage Reports, you can see line items for these aggregated costs.
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Amazon identifies each Amazon EC2 usage type in each Amazon Region and allocates cost from the aggregated management account to the corresponding member account line items for identical usage types in the same region. In the Amazon Cost and Usage Reports, the Unblended Rate column shows that rate applied to each line item.
Note
When Amazon assigns Reserved Instance hours to member accounts, it always starts with the account that purchased the reservation. If there are hours from the capacity reservation left over, Amazon applies them to other accounts that operate identical usage types in the same Availability Zone.
Amazon allocates a regional RI by instance size: The RI is applied first to the smallest instance in the instance family, then to the next smallest, and so on. Amazon applies an RI or a fraction of an RI based on the normalization factor of the instance. The order in which Amazon applies RIs doesn't result in a price difference.
Savings Plans
Savings Plans is a flexible pricing model that can help you reduce your Amazon usage bill. Compute Savings Plans enables you to commit to an amount each hour, and receive discounted Amazon EC2, Fargate, and Amazon Lambda usage up to that amount.
Calculating Costs with Savings Plans
Amazon calculates the charges for Amazon EC2, Fargate, and Amazon Lambda by aggregating all usage that's not covered by Reserved Instances, and applying the Savings Plans rates starting with the highest discount.
The Savings Plans are applied to the account that owns the Savings Plans. Then, it is shared with other accounts in the Amazon organization. For more information, see Understanding How Savings Plans are Applied to Your Usage
Blended Rates and Costs
Blended rates are the averaged rates of the Reserved Instances and On-Demand Instances that are used by member accounts in an organization in Amazon Organizations. Amazon calculates blended costs by multiplying the blended rate for each service with an account’s usage of that service.
Note
Amazon shows each member account their charges as unblended costs. Amazon continues to apply all of the consolidated billing benefits such as reservations and tiered prices across all member accounts in Amazon Organizations.
Blended rates for Amazon EC2 are calculated at the hourly level.
This section includes examples that show how Amazon calculates blended rates for the following services.
Calculating Blended Rates for Amazon S3 Standard Storage
Amazon calculates blended rates for Amazon S3 standard storage by taking the total cost of storage and dividing by the amount of data stored per month.
Calculating Blended Rates for Amazon EC2
The consolidated billing logic aggregates Amazon EC2 costs to the management account and then allocates it to the member accounts based on proportional usage.