Measuring Unit Costs
In a fast-growing company that runs numerous applications and services, cloud costs are bound to increase. Therefore, measuring unit costs becomes crucial to gain visibility and pinpoint areas where cost savings are possible. CloudMonitor has all the tools you need to measure and stay on top of your costs.
Use the cost explorer tool to generate a visualization that could provide insight into your cloud costs. With this tool you can explore the subscriptions, resources groups or cost groups a particular costs belongs to.
Cost by X
The Cost by X tool allows you to analyze your cloud costs across different dimensions. You can select the dimension you want to analyze, and CloudMonitor will generate a chart or table that shows the breakdown of your costs by that dimension.
Cost by Cost Group
The Cost by Cost Group tool provides and overview of the costs incurred by different cost groups. This will provide you with better visibility and identify areas where costs can be optimized.
Reduce costs and save money now with CloudMonitor's cost optimization features!
Measuring Unit Costs Definition
This Capability focuses on creating metrics that show how cloud spend contributes to the business’s value. By determining the cloud spend as a percentage of total revenue, you can correlate the growth in cloud spending to overall business growth. If the two are in sync, it indicates that cloud spend is being utilized effectively. However, if cloud spend is growing faster than the business, it may raise concerns. For example, in the case of a customer-facing application, this metric may help to evaluate the profitability of that unit.
Practitioners often measure unit costs in the context of Cloud Unit Economics. This is a way to maximize profit by objectively measuring an organization’s performance, not just in FinOps but as a whole. Cloud Unit Economics uses metrics like marginal cost and revenue specific to cloud-based software development and delivery to achieve these goals.
Practitioners use the concept of Cloud Unit Economics to maximize profit by measuring how well their organization is performing, not only in FinOps but as a business overall. They calculate the difference between marginal cost and marginal revenue to determine where cloud operations break even and start to generate a profit. This is a crucial concept in economics and provides valuable data to make informed decisions about cloud investment.