We launched on Hacker News for the first time early last year, and we've made a lot of progress since then. We've saved tens of millions of dollars for companies, and we are even more excited to announce the launch of a new product: insured reservations for RDS! We worked closely with AWS on this feature and are excited to finally make it generally available.
We help companies drive down AWS EC2 & RDS spend. Why? Because the way it's done now is a pain. DevOps and Software Engineers end up spending time managing costs and reservations rather than focusing on business problems.
In the early days, we saw horror stories of customers with millions of dollars in monthly on-demand spend simply because their finance team didn't want them committing to AWS. Worst yet, we've seen AWS users who ended up overspending by hundreds of thousands of dollars a month because they overcommitted their Savings Plan commitment.
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 50% for 5 minutes of work, and RDS spend by ~30%.
To reduce by 50%+, 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.
We make money off of 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!
This is by setting your AWS account as the payer account so you can aggregate? I’m curious how the finances will work out - at least one of them had challenges balancing their RIs with customer changes since there wasn’t a feedback cue for developers not to change instance types casually.
On a marketing level, I have an instinctive negative reaction to the claims like the title here has because I know it’s not true for me (my accounts are dominated by storage and network egress so even if EC2 were free you couldn’t get 57%). I’m wondering how best to phrase it to help people understand they can save a lot but not make it seem like you’re misrepresenting the possibilities. It’d also be useful to compare with compute savings plans.
The 57% savings is the difference between the 3-year, no-upfront, standard Reserved Instance rate and the On-demand rate (for RDS it is 30% vs on-demand)
As far as compute savings plans:
1-yr SP is anywhere from 26-29% savings vs on-demand
3-year Sp is anywhere from 49-52% savings vs on-demand
... but note that these commitments are non-transferrable. Customers find our tailorable commitments to be a healthy blend of savings + safety against over-committing to volume they may not need
I think you have a product that some companies will really want. It’s a good product; don’t let your marketing promises exceed the true savings by so much that it makes people leery of what else you might be hiding or stating in a less than straightforward manner.
AWS massively made RDS instances cheaper when they released RDS on Graviton. I can only imagine that'd nearly put a company like usage.ai out of business. I'm curious what defense mechanism they have against this.
Are the on demand and reserved prices the same? If RI’s exist are still cheaper, it shouldn’t impact their business model.
Users already committed to RI cannot change instance types and remain bonded to the contract.
Usage.ai and others give you an insurance that you can get out of the contract. If that existed before, users would return the old instances to usage.ai and get the cheaper ones.
Usage.ai end up with a lot of reserved instances no one wants, with a large contract to pay.
Most of their initial funding got burnt on charges that didn't relate to developing or marketing a product.
AWS is just a horrible product for smaller companies.
Sounds accurate.
I have been offered large discounts by an AWS reseller, and I have not understood exactly how or why they can do this. Are the resellers doing what you are doing but being less transparent about it?
We use similar instruments but allow you to maintain the independence of your AWS organization for what is usually higher savings.
three things, what does select a recommendation to compare it to mean? I'm not sure what I should be selecting. And second, is it utilitzation or utilization? Or is that word like canceled and cancelled ?
and the third thing, when approving, I see total savings of $24.53 and by selecting approve, you'll be charged with 20% of realized savings monthly. Should this give me some idea of how much this will cost ?
I would think its $24.53/12 = $2.44 * .2 = $0.488
Is that correct?
> and bundle them with guaranteed buyback.
> .. We make money off of a 20% Savings Fee.
so this is similar business model, like https://archera.ai/guaranteed-reserved-instances/
"Find big-time savings with short-time commitments. Unlike typical commitments, Guaranteed Reserved Instances can be sold back to Archera within a month of initial purchase and with higher savings than standard offerings."
Also, I just reviewed your T&C and your "Program" states that you provide "Non-Usage Credits". What does this mean? I don't have any guarantee that in an off-scenario where there is an overload of RIs being sold I'll stop paying for them. I'd rather use Vantage and pay a 5% fee on my RIs.
From my conversations with doit sounds like they offer a similar service in that doit acts as an AWS reseller (~~some billing magic) and they apply commitment discounts etc. and pass along a portion of the savings. doit also claim to throw in free cloud architecture and support consulting services as a value add.
Huh.
How do I "buy" the instances using usage.ai instead of AWS? Do you need additional tooling or does it work with awscli/terraform? How do you integrate with my account and how do "your instances" appear in my account and how can I sell it back?
As far as I understand, I can buy/sell reserved instances from you in a flexible way, so they can be used like on-demand instances.
I could guess that Oracle licensing changes or negotiation has made it untenable for AWS.
(Disclaimer: I was an engineer at CloudHealth four years ago.)
* Amazon in general is famous for using scale to drive down costs and/or attack the margin of competitors. So much so that a Bezos quote of "your margin is my opportunity" regularly gets thrown around. This is a direct attack on what is essentially fat AWS margin. Which isn't itself bad. Maybe they've grown complacent and lazy? It does worry me though when the strategy is essentially taking on the reigning champion by using their own game against them, where they both have the home ground advantage and get to set the rules. You're one feature/packaging/pricing change away from becoming irrelevant.
* The huge information asymmetry. AWS can see _all_ the data. They have entire teams dedicated to building models around it. They know who should be on RIs, for what term, the impact to both them and customers. For even the most moderate sized customers and above there are people who have a KPI on driving RI usage + cost reductions into those accounts. How much opportunity is there really? Prospects who have the most to gain from this should theoretically have SAs/TAMs/etc. telling them every month to take these actions. They've either done the low-hanging fruit already or aren't interested because of other competing priorities. I'm not sure another third-party tool changes those things.
* The black swan risk of the insurance-like underwriting of carrying RIs. The models for all of these when I've looked into them meant there was tail risk around a large number of customer simultaneously deciding to hand back their RIs. And there's a lot of reasonable justification to believe that's unlikely. It also doesn't feel like a massive stretch of the imagination to think that a change in macro conditions + a shift to a far more aggressive red ocean strategy + a new instance family + AWS' history of discounting new instances on a $/performance basis to encourage adoption/migration = a huge price drop to drive both competitive and architecture migration en masse. The value of the RIs for what's now considered "legacy compute" would plummet overnight.
All that skepticism aside, the things I continually find most interesting in this space are the general usability and UX improvements. AWS consistently has a pretty suboptimal user experience, and the billing aspects in-particular can be indecipherable at even a trivial level of scale. So maybe the opportunity here is less about attacking margin and more about the fact customers are leaving money on the table purely because AWS make it so dang hard understand and improve things?
I think I understand the model here, but I guess I'm curious how you model in risk of suddenly getting stuck with a bunch of 3 year RI commitments?
Reading through your T&C it looks like you refund us with credits on your platform - sounds like monopoly money to me?
I would love a product that automatically manages the RI renewals (ex. every year) and instance type changes.
AMZN carefully watches the marketplace for "wonders" who are monetizing inefficiencies and if these inefficiencies worth big enough profit, AMZN will fill the gap themselves.
Platform is never your friend or "partner" even if they say so.
