--- name: rampstackco/cost-optimization source: https://app.decimal.ai/s/rampstackco-cost-optimization@2/SKILL.md source_sha256: 643256c58460 --- # Cost Optimization Audit cloud, SaaS, and infrastructure spend. Cut what's not earning its keep. Rightsize what's oversized. Negotiate what's negotiable. Without breaking what works. --- ## When to use - Quarterly or annual cost review - Finance flags rising spend - Vendor contract renewal coming up - Budget cut required - New leadership wants the numbers - Migrating between providers (cost is part of the case) - Audit before scaling significantly (catch waste before it scales) ## When NOT to use - Active incident response (use `incident-response`) - Performance issues that happen to involve infrastructure (use `performance-optimization`) - Vendor evaluation for a new purchase (use `vendor-evaluation`) - Personnel or org costs (out of scope for this skill) --- ## Required inputs - Current cost (monthly, ideally for the last 12 months) - Cost broken down by service or vendor - Inventory of cloud resources (instances, databases, storage, etc.) - Inventory of SaaS subscriptions - Owners per cost line (who decided to spend this, who uses it) - Constraints (compliance, performance, contract terms) --- ## The framework: 5 levers Every cost optimization opportunity falls into one of these levers. ### Lever 1: Eliminate Stop paying for things that aren't used. - Idle resources (instances, databases, environments running but unused) - Subscriptions where no one logs in - Duplicate tools (multiple tools doing the same job) - Old projects still incurring cost - Test environments that should have been torn down - Forgotten domains, backups, snapshots, logs This is usually the largest opportunity in the first audit. Often 10-30% of spend. ### Lever 2: Rightsize Pay for what you actually use, not what you provisioned for the worst case three years ago. - Oversized instances (CPU and memory utilization low) - Over-provisioned databases (storage and throughput far above usage) - Over-purchased SaaS seats - Premium plans where standard would suffice - High-availability setups for non-critical systems Rightsizing requires real usage data, not theoretical needs. ### Lever 3: Restructure Use cheaper structures for the same workload. - Reserved or committed-use pricing (1-3 year commitments at 30-70% discount) - Spot or preemptible instances for fault-tolerant work - Cold storage for data accessed rarely - Tiered storage (hot/warm/cold) by access pattern - CDN caching to reduce origin load - Compression and deduplication - Serverless for spiky workloads - Reserved instances for steady workloads The right structure depends on the access pattern. Mismatch costs money. ### Lever 4: Negotiate Pay less for the same thing. - Annual contracts at lower rates than monthly - Volume discounts at higher tiers - Multi-year commitments for predictable workloads - Bundle deals (consolidating services with one vendor) - Renewal negotiation (vendors expect you to ask) - RFP / competitive bid (using alternatives as leverage) Most enterprise vendors negotiate. Most SaaS vendors don't, except at higher tiers. Consumer-tier services usually don't. ### Lever 5: Reframe Change the question. - Build vs buy: maybe in-house is cheaper at scale - Buy vs build: maybe outsourcing is cheaper at small scale - Different architecture (e.g., monolith vs microservices) has different cost profiles - Different audience (do all customers need the same tier?) - Different stack (open source vs commercial) Reframe is the longest-lead lever. Worth thinking about even if not actionable now. --- ## Workflow ### Step 1: Pull the spend data Get monthly costs by service, vendor, and (where possible) team or project. For cloud (AWS, GCP, Azure): the billing console and cost-explorer tools. For SaaS: each vendor's billing portal, plus an SaaS-management tool if available. For everything else: bank statements and accounting export. 12 months minimum. Trends matter as much as absolute numbers. ### Step 2: Categorize Organize spend into categories: - **Hosting / compute** - **Storage** - **Database** - **Networking / CDN** - **Monitoring / observability** - **Email** - **CMS / hosting platforms** - **Analytics / marketing** - **Productivity / collaboration** - **Development tools** - **Security / compliance** - **Other** The categories vary by business. The point is: similar costs grouped, easy to compare. ### Step 3: Identify the biggest line items 80/20 rule. Usually 20% of vendors account for 80% of spend. Focus the audit on the top 80%. The long tail can be cleaned up but rarely yields big savings per item. ### Step 4: Apply the 5 levers For each major line item, walk the levers: | Lever | Question | |---|---| | Eliminate | Is it used? Could we stop using it? | | Rightsize | Are we paying for capacity we don't use? | | Restructure | Is there a cheaper pricing model or service tier? | | Negotiate | When was the last renewal? Did we negotiate? | | Reframe | Is this even the right approach? | Document the opportunity, the effort, the risk, and the savings estimate. ### Step 5: Prioritize Plot opportunities on a 2x2: - Y axis: savings - X axis: effort Quadrants: - High savings, low effort: do first - High savings, high effort: plan - Low savings, low effort: do as time allows - Low savings, high effort: skip Also consider risk: - Eliminate something used by no one: low risk - Rightsize a database: medium risk (test in staging first) - Replace a critical dependency: high risk (plan carefully) ### Step 6: Execute the easy wins For each easy-win opportunity: - Document the change - Get owner approval - Make the change - Monitor for unexpected impact - Confirm cost reduction in next billing cycle Easy wins typically include: - Canceling unused subscriptions - Tearing down idle resources - Switching off dev environments outside business hours - Moving cold data to cheaper storage tiers ### Step 7: Plan the larger work For higher-effort opportunities: - Spec the change (use `pm-spec-writing` for the plan) - Test in staging - Roll out incrementally - Validate cost impact Examples: - Migrating to reserved instances - Consolidating monitoring vendors - Migrating from one CMS to another with cost benefit ### Step 8: Set up ongoing visibility Optimization isn't one-time. Costs creep back up. - Monthly cost review (at least) - Cost dashboard (current, trend, by category) - Alerts on cost spikes (e.g., daily spend exceeds threshold) - Tagging or labeling on cloud resources (cost by team or project) - Quarterly deeper review ### Step 9: Negotiate at renewal For vendor contracts up for renewal: - Start the conversation 60-90 days before renewal - Have alternatives identified (even if you don't switch) - Ask for a multi-year discount - Ask about volume tiers - Ask if usage rightsizing is possible - Be willing to walk (most vendors find a way to keep you) Pre-pandemic, many vendors auto-renewed at increases. Post-pandemic, many are hungry for retention. Ask. ### Step 10: Document the policy Going forward: - New vendor evaluation requires cost justification - Resource provisioning has approval thresholds - Tagging and labeling are required for cloud resources - Quarterly review is calendared - Cost attribution is clear Without policy, costs creep. --- ## Common opportunities by category ### Hosting and compute - Reserved or committed-use pricing for predictable workloads (30-70% off) - Spot or preemptible for fault-tolerant batch - Auto-scaling for variable loads - Right instance family (compute-optimized, memory-optimized, etc.) - Dev/staging instances stopped outside business hours ### Storage - Lifecycle policies to move old data to cheaper tiers - Delete old logs, backups, snapshots - Compression for archival - Object versioning costs (every version is a stored object) ### Database - Right size based on actual CPU/memory usage - Reserved capacity for predictable workloads - Read replicas for read-heavy workloads (cheaper than scaling primary) - Drop unused indexes (indexes cost storage and write performance) - Old data archived or deleted ### Networking and CDN - CDN reduces origin egress costs (often the biggest cost category) - Compression on the wire - Image and video optimization - Region-aware routing ### Monitoring and observability - Sample logs (don't ingest 100% of high-volume sources) - Retention policies (do you need 90 days or 30?) - Consolidate tools where possible - Free or open-source tooling for non-critical needs ### SaaS - Audit logins per seat (inactive users on $X/seat = $X waste) - Renegotiate at renewal - Move to annual billing for the discount - Consolidate overlapping tools --- ## Failure patterns **Cost-cutting that breaks something.** Aggressive rightsizing without testing causes outages. The cost of an outage is usually larger than the savings. **Optimization that takes more time than it saves.** A team spends a quarter saving $5K/year. Math doesn't work. Focus on opportunities where savings exceed effort. **Renewal autopilot.** Annual renewals go through without review. Calendar them. **No tagging.** Cloud spend grows; no one knows whose. Tag everything from day one. **Free tier overruns.** "It's on the free tier." Then it's not, and bills surprise. Set alerts on free-tier services. **No environment differentiation.** Production-grade staging "to match prod." Costs as much as prod. Often unnecessary. **Untouched legacy.** "The old project still runs." Why? Often: nothing actually uses it. Audit and shut down. **Premium tiers for non-premium needs.** Enterprise plan because someone wanted a feature that's been since added to lower tiers. Recheck. **Vendor lock-in justifying cost.** "We can't switch." That's not a reason to overpay; it's a strategic problem to plan around. **Optimizing the small stuff while ignoring the big stuff.** Saving $50/month on tools while $5K/month sits in oversized infrastructure. Top-down first. **Penny-wise, pound-foolish.** Cutting a useful tool to save $20/month, then losing hours to manual work. Tools that pay for themselves shouldn't be cut. **No reinvestment.** Every dollar saved goes to bottom line; nothing reinvested in upgrades or capacity. Saved costs and improved capability aren't either/or. --- ## Output format A cost optimization document includes: - **Current state:** total spend, by category, trended - **Top line items:** the biggest costs - **Opportunities:** by lever (eliminate / rightsize / restructure / negotiate / reframe) - **Prioritized list:** with savings, effort, risk - **Action plan:** owners, dates - **Easy wins executed:** what's already done, results - **Ongoing governance:** dashboard, review cadence, tagging, approval thresholds --- ## If required data is unavailable This skill's output depends on data, measurements, or tool results it cannot generate on its own. When a required input, tool, or data source is unavailable or unverifiable, the sanctioned output is the deliverable with the gap stated: what was needed, what was actually obtained or verified, and which parts of the output are affected. Fabricating, estimating, or interpolating a required number to complete the deliverable is never sanctioned. A stated gap is a complete answer. --- ## Reference files - [`references/cloud-audit-checklist.md`](references/cloud-audit-checklist.md): A practical walkthrough for auditing a cloud account (compute, storage, database, network, monitoring) for waste and rightsizing opportunities.