Show HN: I built a service to help companies reduce AWS spend by 50%
We help companies drive down AWS EC2 spend. Why? Because the way it's done now is a pain. DevOps engineers end up becoming cloud accountants trying to figure out what commitments are expiring soon and how much they're saving.
Previous to founding Usage, I worked on high-performance computing research at JP Morgan Chase and as a software engineer at a number of medium-sized startups.
Here's how it works: We are typically brought in by a DevOps manager to cut AWS EC2 costs. The app is entirely self-service and the savings are generated automatically, typically we do this live on a call. On average, we reduce AWS EC2 spend by 57% for 5 minutes of work.
To reduce by ~57%, we don't touch the instances, require any code change, or change the performance of your instances. We buy Reserved Instances on your behalf (a billing layer change only) and bundle them with guaranteed buyback. So you get the steep 57% savings of 3-year no-upfront RIs with none of the commitment (you can sell them back to us anytime after 30 days).
We make money off a 20% Savings Fee. Happy to chat directly kaveh@usage.ai
Have you experienced any issues with managing your company or organization's AWS expenses? We'd love to hear your feedback and ideas!
50 comments
[ 2.8 ms ] story [ 131 ms ] threadHow are the payments handled? What happens if I change the sizing of my instances?
57% is the common savings number by moving to a 3 year commitment on AWS. Many people are hesitant to commit to 3 year contracts, it's hard to predict usage that far. Consider we may be going into a downturn and you are now legally required to pay for today's usage. Seems like OP is taking on some (all?) of that risk? I for one would not want to be the one holding those bags today, given the near-term economic outlook.
To get towards the 80% figures requires a deeper understanding of a company's usage, processes, and code. These need code changes
There are plenty of blog posts around about that for X->Y
However, their customers are not. I've helped several companies reach 80%+ reductions in compute/storage needs, which then translates into similar cost savings. No reservations needed, you have to provide deeper value and changes to achieve this.
> Usage does take on all the risk.
Seems like a great way to get 3-year commitment prices without the risks. Are you worried about assuming all that risk? What about abuse of this relationship by your customers?
does that mean if we save 50%, you keep 20%?
say our bill is 10k and you save 5k, how much do we pay you?
The transfer of RIs are done through AWS APIs.
Our roadmap for the next 2 Quarters is Full Multi Cloud (Azure, GCP, and AWS) support.
Also, what happens if an organization is currently using Savings Plans and is looking to pivot towards your offering?
For a customer with an SP, we typically get them boosted to 100% coverage with our Flex RIs.
Once the SP expires, we automatically switch the customer over to 100% Flex RI to maximize savings.
Flex RI = 3-year no-upfront Standard Reserved Instances with Guaranteed Buyback
Either way, an interesting idea. Since you're fronting the money for the RIs, I assume you have a max spend that you won't go over (like, you won't take Netflix as a customer)?
We have some customers that spend $10M+ on AWS, so we can work with any size of company.
To limit this risk, we only offer buy-back on particular instance families and regions that are most popular (and easy for us to sell to other users).
With 100s of users -- we have network effects that make it easy for us to sell.
Isn’t this business model fundamentally flawed? And not profitable (unless a customer uses you for > 29 months)
Because ONLY companies who plan to use your service for less than 29 months (the break even of a 3 year contract where you keep your 20% cut), should be using your service otherwise it’s just cheaper for them to call up Amazon and get their own 3year RI contract.
Meaning, you’re always going to be in a situation where a customer is going to sell back their RIs and you’ll become unprofitable.
Said differently, you’ll only be profitable if a customer uses you for more than 29 months.
We sell the RIs to our other users (now in the hundreds) so we don't take a loss. We only take a loss when we aren't able to sell your RIs (which is what we use some of our Venture Capital money for).
There's an entire sub industry of billing partners who are profitable enough just offering eg 8% off retail prices.
In my experience Amazon can be difficult to negotiate with directly if you're not willing to commit to YoY spend growth. It's easier to deal with billing partners.
Why orgs wouldn't go to Amazon directly via retail is the 3 year commitment that comes with RIs.
20% over the discounts is a bit steep imo but I'm sure there's a market for RIs as a service (particularly if the RI pricing they charge is the 100% upfront covered by their own internal funds)
Show HN: Usage, Cut your AWS Bill by 50%+ in 5 Minutes - https://news.ycombinator.com/item?id=31015171 - April 2022 (17 comments)
Show HN: I built a service to help companies reduce AWS spend by 50% - https://news.ycombinator.com/item?id=30183465 - Feb 2022 (60 comments)
The rule on HN is that if a story has had significant attention in the last year or so, we mark reposts as dupes (https://news.ycombinator.com/newsfaq.html). For Show HNs it's sometimes ok to post a bit more frequently as long as the Show HN focuses on new work since the last thread. Not this frequently, though.
Please see also this rule from https://news.ycombinator.com/newsguidelines.html:
Please don't use HN primarily for promotion. It's ok to post your own stuff occasionally, but the primary use of the site should be for curiosity.
I know RIs are still supported though I'd heard they're intended to be deprecated by SPs (my source could be wrong)