AWS Knowledge
Understanding AWS CloudFormation Pricing 2025
Piyush Kalra
Jan 8, 2025
Businesses that use AWS services consider effective management of cloud resources as their most important priority. AWS CloudFormation provides an Infrastructure as Code (IaC) solution that is reliable and efficient for consistently provisioning, managing, and automating cloud resources. Yet, its pricing structure should be understood to ensure cost control.
AWS CloudFormation Pricing Breakdown, Key Cost Drivers & 30% Spending Reduction Strategies.
Are you a cloud developer or engineer with a special interest in AWS? This blog will provide tangible information about the model used in pricing AWS CloudFormation and ways of reducing costs.
What is AWS CloudFormation?
Image Source: AWS CloudFormation
AWS CloudFormation treats IaC, thus making it easier to model, provision and manage your cloud resources. Reusable JSON or YAML templates automate the provisioning and management of Amazon Web Service resources alongside those from other parties, ensuring deployments are consistent across environments.
Key Features and Benefits
Infrastructure as Code: Create its cloud infrastructure using reusable JSON or YAML templates.
Resource Automation: Streamline deployment processes that are complex with almost no human intervention.
Consistency and control: Ensure deployments can be made reliably repeatedly across multiple environments.
AWS and Third-Party Integrations: Fully blend with Amazon Web Services such as EC2, Lambda, Amazon RDS, Elastic Load Balancing, and third-party elements for a holistic setup.
Flexible Pricing: Pay only for what you use without having to commit upfront or pay minimum fees
When using registry extensions, charges apply per handler operation, including CREATE, UPDATE, DELETE, READ, or LIST actions for resource types and CREATE, UPDATE, or DELETE actions for Hook types.
How does AWS CloudFormation Work?
There are two main factors that make AWS CloudFormation easy: Templates and Stacks:
Templates: these serve as a cloud infrastructure blueprint. They are written in JSON or YAML. The template specifies all the resources you want to create, such as servers, databases and storage, which means you can have a clear plan of action.
Stacks: when a template is deployed it becomes a stack, which represents an entire collection of AWS resources that can be created, updated or deleted as one whole entity. This kind of approach makes managing resources easier and ensures that your infrastructure remains consistent throughout.
Resource Lifecycle Management
AWS CloudFormation manages the entire lifecycle of your resources, from creation and updates to deletions and rollbacks if something goes wrong.
Compared to manually configuring resources, what you need to do is define these requirements in a template and let AWS figure out how they should be provisioned. It helps users deploy quickly by using this type of approach, minimize errors being made in deployments and providing safety nets for safe rollbacks.
These templates contain intrinsic functions that can be used to customize and automate the configuration required for dynamic infrastructures that scale up according to your specifications.
Use Cases
Integration of DevOps: To ensure uniformity and minimize errors, automate the infrastructure by means of CI/CD pipelines that test and deploy it.
Simple Scalability: Deploying single EC2 instances can be scaled easily into complex, multi-region applications using templates.
Disseminate Good Practices: Build reliable and efficient infrastructures by developing standardized deployment templates.
Deep Dive into AWS CloudFormation Pricing Structure
Contrary to some perceptions, AWS CloudFormation itself is a free service. Costs are incurred based on the resources provisioned and any third-party integrations used during operations. You will pay for the AWS resources created (e.g., EC2 instances, and Amazon RDS databases) as if they were manually provisioned.
Detailed Pricing Components
Handler Operations
CloudFormation may charge for invoking handler operations when using third-party resource providers or custom hooks, such as creating or updating these resources:
Price Per Handler Operation: $0.0009 per operation.
Duration Fee (if processing exceeds 30 seconds): $0.00008 per second.
Infrastructure Usage Costs
Costs are incurred for the AWS resources provisioned—like compute instances, databases, or load balancers—according to the respective pricing of those services.
Data Transfer
Any data transfer conducted by provisioned resources also contributes to costs and is billed at standard AWS rates.
Example Scenarios
Managing 500 third-party resources with one daily operation each:
Monthly handler operations = 500 x 30 = 15,000.
Free tier = 1,000 operations.
Monthly Cost = (15,000 - 1,000) x $0.0009 = $12.60.
Remember to monitor handler operations using third-party integrations so that these extra costs are controlled properly.
Free Tier & Cost Monitoring Tools
AWS Free Tier: Includes 1,000 handler operations per month per account for free, covering basic usage for most new users.
Cost Management Best Practices: Utilize tools like AWS Cost Explorer and AWS Budgets to monitor, manage, and optimize your CloudFormation expenses.
Integrations to Maximize Cost Savings
Another great strength of AWS CloudFormation is its easy integration with other AWS services. Here's how some of the most important integrations can optimize costs:
AWS Budgets: Set budget thresholds and get alerted on unexpected spikes.
Cost Explorer: Analyze detailed billing data with built-in filters like tags or resource groupings.
Tagging Resources: AWS automatically tags all created resources by CloudFormation for easy tracking in cost allocation.
Tools for Simplified Cost Optimization
AWS Pricing Calculator: Estimate and forecast your CloudFormation usage.
Cost Allocation Tags: Enable granular tracking of individual stack costs for better reporting.
Case Study: How Deloitte Reduced Deployment Times and Costs with AWS
Deloitte is a global network of independent firms serving clients in more than 150 countries and across 20 industries, including more than 85% of the Fortune 500. Deloitte strengthened its ConvergeHEALTH Miner platform with the power of AWS. The platform was optimized using AWS CloudFormation to accelerate data collection and analysis for personalized medicine, which enabled Deloitte to streamline deployments and cut operational costs while pushing the boundaries of healthcare innovation.
Key Strategies:
Automated deployments using AWS CloudFormation templates.
One-click Miner setup with AWS Service Catalog.
Reduction in compute cost by stopping unused instances.
Integration of AWS services to ensure scalability and regulatory compliance.
Results:
Deployment times were reduced from 2–3 weeks to just 45 minutes.
Clients achieved up to 70% savings in costs, and process time was reduced to 99%.
Accessibility for data scientists increased significantly, leading to rapid medical discoveries.
Top Tips for Reduce AWS CloudFormation Costs
Modularize and Make Templates Reusable: Break down large templates into smaller, reusable ones to avoid the duplication of resources.
Use Parameters and Intrinsic Functions: Adapt templates to environments to ease management and minimize complexity in configuration.
Use Budget Alerts: Set up alerts via AWS Budgets for threshold exceedances.
Tag All Resources: Use precise tags to visually and track more easily with Cost Explorer.
Save on CloudFormation with AWS Savings Plan and Pump
Managing costs on CloudFormation is a little tricky, but the AWS Savings Plan can reduce compute costs by up to 72%. These plans allow you to commit to AWS spending across services like EC2 and Lambda, offering flexibility while saving money. Unused credits are forfeited if not used within the same family, size, and region before expiration.
Pump helps maximize these savings by redistributing unused spending across its network, offsetting spiky workloads. If Pump purchased your Savings Plan, you’ll receive full AWS credits for unused commitments. For existing plans, Pump will try to allocate unused spending but can’t guarantee full crediting. Learn more here.
Conclusion
AWS CloudFormation is greater than cost benefits; it's scalable, efficient, and can automate cloud resources. Knowing your pricing structure along with the information provided in strategies will help you manage your environment effectively while always keeping an eye on savings.
Getting started with the optimization of cloud computing costs begins here with AWS CloudFormation and how to use resources such as AWS Pricing Calculator and Cost Explorer, among others.
