Cloud cost optimization will stretch your cloud budget further in 2025. With Gartner reporting that global spending on cloud services is set to rise from $595.7 billion in 2024 to $723.4 billion in 2025, it’s time to get strategic about your cloud spending. 

This surge, partly driven by the rise in SaaS investments, shows how far the cloud has come. A recent study supports this–81% of IT leaders are increasing their cloud budgets to support AI workloads in 2025. 

Cloud cost optimization is the way to make sure you get the most value for your IT budget. Here are strategies to help you maximize your cloud investments in 2025.

What Are the Best Practices for Cost Optimization?

Cloud costs can add up quickly. One company was hit with a $65 million cloud bill in just one quarter. Businesses need a solid cloud optimization strategy to avoid getting caught blindsided. 

1. Understand Your Cloud Bill

In recent years, enterprises have allocated more IT hosting budgets to cloud services. However, as cloud expenses rise, managing costs has become more challenging. A Civo report found that 59% of organizations saw their cloud bills increase in 2024, with 37% believing the cloud hasn’t delivered its cost-effectiveness promise.

Why is this happening? Tech Radar notes that inflation, AI deployment, and geopolitical tensions have triggered 10-25% price hikes. Smaller businesses are feeling the pinch, with 32% of those with fewer than 50 employees reporting monthly bills over $10,000. Fluctuating exchange rates and consumption-based billing further complicate budgeting.

Understanding each cost component–compute, storage, and egress fees–is critical, as cloud bills are only becoming harder to predict. Understanding your cloud bill is the first step to controlling these costs. 

2. Choose a Cloud Provider with Predictable Pricing

Look for cloud providers with transparent, upfront pricing. No hidden fees, no surprises. Managing your cloud budget is easier when you know what to expect. Remember to look beyond any initial cloud savings on hardware and software.

Start with the core infrastructure – compute, storage, and networking – before adding extra services that can complicate things and increase costs. Understanding these basics sets you up for more efficient IT operations.

Match your computing power to the cloud use cases you need to avoid overprovisioning. Opt for providers with predictable cloud pricing for networking resources. This strategy helps optimize cloud resource usage, control costs, and get more ROI from your investments.

3. Identify Unused and Unattached Resources

In resource management, there’s an ongoing tradeoff between speed, quality, and cost because only two can be fully achieved at any given time. Over-provisioning and underutilization cause waste, especially when resources sit idle after testing or business changes. These unused resources incur costs and waste energy, only adding to carbon emissions.

We need to monitor our footprint in 2025. Goldman Sachs Research reports that data center power demand is set to rise 160% by 2030. That means emissions are climbing, and unused cloud resources only worsen this inefficiency by raising costs and causing an environmental impact. Every dollar saved on cloud spend reduces costs and lowers the carbon footprint.

4. Right-Size Your Computing Services

Right-sizing in cloud computing services adjusts resources to fit the needs of your workloads, applications, or services.  It identifies over-provisioned or under-utilized resources and resizes them for better performance to maximize resource usage while cutting costs.

AWS notes that only 16% of Operating System (OS) instances are sized appropriately for their workloads. The other 84% could run on a smaller footprint. Directly porting them to the same-sized cloud instances would be a waste. Right-sizing matches cost-efficient cloud resources to your actual needs. It helps you avoid over-provisioning or under-provisioning.

5. Implement Autoscaling

Autoscaling helps to keep your cloud resources in check without overpaying. It automatically adjusts resources based on demand, ensuring you only pay for what you need while maintaining performance. Choosing the right metrics, like CPU usage patterns and memory, is key when autoscaling. Also, remember unique metrics, such as queue message counts, to avoid unnecessary scaling.

Review and adjust your autoscale settings as workloads change regularly. Align your scale-in and scale-out rules to prevent flapping, where resources keep scaling in and out, wasting resources and affecting performance. Set up activity log alerts for scaling events to keep you in the loop. 

6. Use the Correct Storage Options

Not all data needs the same storage solution. Block storage is best for high-performance needs, while object storage is more cost-effective for archival data. Choose the right storage tier based on how often you access your data.

Today, many companies rely on public cloud storage, with 59% of organizations using these services. However, object storage leads the way, making up 70% of cloud storage capacity, while block and file storage each represent about one-third of the total.

Finding the best fit for your needs can be difficult with different options. When choosing storage, consider cost, performance, and scalability. Know your needs to store data efficiently and securely while keeping costs low. 

7. Capitalize on Spot Instances

Spot instances are a great way to access unused cloud capacity at a fraction of the cost. They’re ideal for non-critical workloads that can tolerate interruptions, such as batch processing or data analysis tasks. You can significantly reduce costs by using spot instances, with AWS reporting cloud savings of up to 90% on non-essential tasks.

A common mistake that leads to cloud inefficiencies is using outdated instance types, with 48% of organizations falling into this trap. Regularly assessing and updating your instance types is a good idea to take full advantage of cost-saving opportunities. It also maximizes savings, all while maintaining performance.

8. Build a Multi-Cloud Strategy

Using multiple cloud providers can help you optimize costs. Each provider has strengths and weaknesses. A multi-cloud strategy lets you choose the best pricing for each service. 

That’s why 76% of organizations already used a multi-cloud strategy in 2023, and by 2024, 86% planned to make the switch. This trend is likely to grow in 2025. When considering this approach, evaluate your organization’s technical and operational needs. While it can be cost-effective, make sure it works for you.

9. Monitor Cost Anomalies in Real-Time

Cloud costs can quickly spiral. Stay on top of your budget by setting up real-time monitoring to track your spending and spot any cloud cost anomalies early. This will allow you to adjust before costs get out of hand.

Cloud resources can have new, removed, or changed costs. For example, a new resource, like a virtual machine, may show costs starting from zero. If a resource is stopped or deleted, its costs will be zero. Any changes, like resizing a virtual machine, can result in cost increases or decreases, sometimes showing up as a new meter replacing the old one.

Anomaly detection helps you catch any unexpected costs or charges. It can identify unusual cost spikes or drops so you can act quickly. 

Let’s say you typically spend $50 a day on a subscription. But, a new service was added by mistake, and now the daily cost has jumped to $150. Anomaly detection will flag this spike to verify the validity of the change and correct the issue immediately when needed.

10. Optimize Cloud Costs at Every Stage of the Software Development Lifecycle

We’ve come a long way since the early 2000s when AWS changed how businesses use cloud resources. While this shift gave businesses access to scalable cloud services, it came with a wide range of options — server size, storage, memory, and more — making it challenging to control costs. 

While cloud providers now offer tools to track usage and optimize costs, with the rise of microservices and containers, cost management has become even more critical. As PwC mentioned, 75% of top performers in 2024 relied on GenAI throughout the software development life cycle. 

Businesses should optimize overall cloud costs early in the software development lifecycle to avoid unnecessary spending. 

11. Review Pricing and Billing Information Regularly

Cloud computing offers scalability and significant cost savings, but unexpected charges can add up quickly. That’s why you must regularly review your cloud provider’s pricing and billing details to help avoid surprises.

Every cloud service provider, such as  AWS, Microsoft Azure, and Google Cloud, charges users a fee for networking, storage, computing, data transfer, and security services. While uploading data is usually free, downloading or transferring data can incur extra fees. Software licensing and security services can also add to the costs.

Most providers use a pay-as-you-go model, meaning you pay for what you use. But this can lead to hidden charges if usage spikes. Monitor your bills to spot areas where you can cut costs. Also, check for discounts or long-term plans that may reduce costs. Regular audits keep you in control of your cloud expenses. 

12. Set Budgets for Each Project or Department

G2 shared that in 2024, 49% of businesses struggled with cloud spending. Gartner points out that 80% of total expenditure is expected to be overspent by 20% to 50%. How do we prevent this in 2025? One way is through clear and transparent budgeting.

Setting budgets for each project or department is key to controlling cloud costs. Clear, defined budgets allow businesses to match spending with actual usage and project goals. For example, the product management department may need a higher budget for cloud costs if significant updates are planned regularly during the year. In contrast, the IT department may have a more stable, lower budget for ongoing operations.

Since each department or project has unique cloud requirements, tailor your budgets, showback, and chargeback processes accordingly. This will help ensure resources are allocated efficiently and spending stays in check.

13. Automate Cloud Cost Optimization

The State of Cloud Usage Optimization 2024 shared that companies lose billions yearly due to cloud waste. Enterprises are losing over $50,000 each month, with 15% facing losses over $75,000. 52% of respondents noted that manual processes are a challenge that plays a significant role in this waste.

Making the most of cloud resources is challenging with humans at the helm. Details slip through the cracks, and mistakes happen, like costly security breaches. Businesses must rely on cloud cost intelligence to maximize their cloud cost efficiency. 

You can eliminate much of the manual work by setting provisioning, scaling, and termination rules. That’s why 82% of businesses believe automation is key to improving cloud ROI, based on the 2023 State of CloudOps report.

14. Opt for Reserved Instances for Long-Term Workloads

Reserved instances (RI) are a smart way to save on cloud costs. Cloud vendors like AWS, Microsoft Azure, and Google Cloud all offer RIs, with cloud savings of up to 72% compared to on-demand pricing.

RIs are ideal for predictable workloads. When you commit to using specific resources for one or more years, you lock in significant discounts. AWS reserved instances apply to matching instance types, regions, and platforms. They ensure that you get the right resources at a lower cost.

15. Minimize Data Transfer Fees

Scaling down on data transfer fees is an intelligent cloud cost strategy. Just take a look at NASA’s experience with cloud storage costs. While planning its future data needs, NASA estimated its cloud costs at $65 million per year. However, they missed a key detail – data egress charges. These fees are incurred every time data is downloaded from the cloud. This oversight added $30 million to their annual cloud expenses.

This mistake highlights the need for careful planning. Data transfer costs can quickly escalate if not managed properly. Organizations can keep costs in check by limiting unnecessary data transfers.

Be proactive about cloud fees in 2025. It’ll help you avoid unexpected costs and keep cloud spending under control.

16. Implement Cloud Governance Policies

A Statista survey found that over 60% of cybersecurity professionals experienced security incidents related to public cloud usage in 2024. The cost of these breaches was steep, with the average breach involving public cloud data reaching $5.17 million, according to IBM. 

These stats show just how critical cloud governance is. Setting clear rules on who can provision resources and establishing spending limits helps prevent unnecessary costs and reduces the risk of expensive security breaches. So, take that step in your business. Get every team, from IT to finance, aligned with your cloud policies. This keeps your data secure and spending under control.

17. Track Cost Center Spending

Cost centers give you a clear view of spending across accounts and resources in the cloud. They help control costs and track performance. You can optimize expenses by identifying cost drivers and measuring cloud cost efficiency with KPIs like cost per unit and ROI. Cost center analysis also aids in better budget allocation, pricing, and investment decisions.

Managing cost centers can be tricky due to a lack of visibility and inaccurate cost allocation. However, these challenges become easier to handle with clear accountability and regular budget reviews.

Tagging cloud resources by department or team can provide deeper insights into usage and spending, improving visibility and simplifying cost tracking.

18. Use Real-Time Analytics for Informed Decisions

Real-time data analytics are reshaping how businesses operate. Modern analytics began in the 19th century with Herman Hollerith’s punch card system. Today, cloud technology has made real-time analytics accessible. It allows businesses to respond quickly to market changes and improve cloud cost efficiency.

Cloud analytics offer several key benefits:

• Only pay for what you use, which is ideal for businesses with variable needs.
• Quickly adapt and make decisions based on real-time insights.
• Easily scale resources and storage as needed.
• Ensure data integrity, compliance, and trust with high levels of security to protect sensitive data.

Real-time analytics help businesses track spending, identify trends, and make quick adjustments, keeping cloud costs under control.

19. Adopt Cloud-Native Design Principles

Adopting cloud-native design principles is a smart way to cut cloud costs. Features like auto-scaling and serverless computing allow your systems to adjust as needed, so you’re not overpaying for unused infrastructure. Cloud-native architecture takes full advantage of the cloud’s flexibility, making it more cost-effective than traditional setups.

Automation is a significant help here. It ensures resources are used only when necessary, which helps reduce waste and prevent overprovisioning. Cloud-native systems also rely on stateless components, which are easier to scale and fix.

Managed services save you from the cost and hassle of maintaining your infrastructure. They also simplify security with defence-in-depth practices, keeping costs low while protecting your systems. As cloud-native systems shift with new capabilities, they help you save more over time.

20. Implement Resource Scheduling

Cloud resource utilization and scheduling can be complex. Resources are diverse and interconnected, and loads can be unpredictable. A study on cloud resource management shows efficient scheduling is crucial for optimizing resource utilization and fulfilling application requirements while staying within budget. It’s a complex problem but necessary for cloud environments.

Resource scheduling helps cut cloud costs by running non-critical tasks during off-peak hours when prices are lower. You can access actual cloud savings, as cloud providers offer cheaper rates during these times.

21. Optimize Software Licensing Costs

Software licenses can take up a large chunk of your IT budget. Why? Many companies, especially huge ones, often have more licenses than they need. 76% of companies over-license to avoid audit penalties.

According to G2, 30% of software licenses are never used, and another 8% are rarely used. In addition, 56% of audits result in extra charges due to under-licensing. In the long run, not managing licenses properly can cost you big time.

Unfortunately, many companies don’t use automated tools to track licenses. This means they’re paying for licenses they don’t need.

22. Adopt FinOps Practices

FinOps bridges the gap between finance and engineering. It brings together finance, operations, and tech teams to focus on transparency and accountability. This cohesion makes cloud cost optimization a shared goal.

FinOps also tracks metrics like cost per transaction to gauge success. It’s both an operational strategy and a mindset that works to maximize savings across the cloud. The five pillars of FinOps are:

• Accountability: Cross-functional teams manage cloud spending.
• Cloud Cost Optimization: Focus on optimizing resources, pricing, and architecture.
• Measurement: Metrics track business value and performance.
• Planning: Ensures financial goals are met.
• Tools: Real-time billing reports support better decisions.

FinOps promotes a culture of learning. Success is measured through significant cost savings and accurate forecasts for future cloud spending. By adopting FinOps, you can control cloud costs and align them with your goals.

23. Educate Your Team on Cloud Cost Optimization

Cloud costs can spiral quickly if your team isn’t careful, especially if they’re not up-to-date on cloud computing resources and spending. Regular training on cloud cost optimization techniques can help combat this, so make it a priority.

Here are some ways to keep costs in check:

• Encourage cloud certifications and training. Many vendors offer programs focused on cloud cost optimization.
• Set clear goals and governance policies. Cut idle resources and optimize unused storage to save money.
• Get familiar with pricing models. Choose the best one — pay-as-you-go, subscription, or reserved pricing.
• Use tagging to allocate expenses to the right teams. It makes tracking easier.
• Set up real-time monitoring and alerts. Keep an eye on usage to avoid costly mistakes.
• Automate repetitive tasks. It will lighten the load and improve cloud cost optimization.

Educate your team about your cloud cost optimization strategy and give them the cloud cost management tools they need. This will lead to smarter spending and better cloud cost management.

24. Create a Culture of Cost Awareness

Creating a culture of cost awareness is crucial for effective cloud cost management, especially as global spending on public cloud services is projected to exceed $599 billion in 2023, up from $421 billion in 2021. 42% of CIOs and CTOs identify cloud waste as their top challenge. 

To combat this, in addition to the above-mentioned tactics, organizations should conduct regular audits to identify inefficiencies and implement chargeback mechanisms that promote accountability. This encourages collaboration across departments to develop unified strategies for resource optimization. By cultivating a culture of cost awareness, organizations can significantly reduce waste and align their cloud spending with strategic business goals.

25. Rely on Tools

Cloud cost optimization tools can help you take these best practices further. Cimpl Cloud, for example, provides an all-in-one solution to optimize cloud costs, improve visibility, and ensure security and compliance.

• Lower cloud costs by up to 30% by identifying idle or underused services.
• Allocate cloud charges accurately for better budgeting and chargebacks.
• Prevent misconfigurations and security breaches while staying compliant with standards like HIPAA, NIST, and FISMA.
• Gain total visibility into your multi-cloud environment for better collaboration and resource management.
• Scale cloud usage confidently without exceeding your budget.

Cimpl Cloud makes it easy to control cloud costs. It gives you insights and tools to optimize resources, ensure security, and scale your infrastructure without overspending.

Cut Cloud Costs in 2025 with Cimpl Cloud

AI took the lead in cloud computing in 2024. It helped reduce overhead while improving their day-to-day processes.

The cloud will continue to advance in 2025. New technology and shifting regulations will drive change, and those who capitalize on it will be best positioned to succeed. The key is to focus on cloud cost optimization at every step.

Cimpl Cloud makes this easy. It automates cloud cost management, optimizes cloud costs, and ensures your data is safe and sound. Optimize your cloud spending today with Cimpl Cloud. Let’s chat!