Deconstructing Blended and Unblended Costs; How can MSPs help customers reduce AWS costs?

“Benefit from economies of scale” — perfectly summarizes Blended and Unblended costs. The costs’ concept has always been difficult to comprehend, but it is necessary to make informed decisions. So here is the perfect explanation with suitable examples to give you more clarity on these costs.

What are Unblended Rates?
Unblended rates are the rates that are visible in the AWS billing console. Unblended rates are just a fancy term for normal rates unless you’re dealing with consolidated billing, have an account linked under a payer account, or you manage multiple accounts for your organization.

Consolidated Billing Explained
1. Consolidated Billing—A mechanism to establish a hierarchy between accounts in order to generate a single invoice for multiple accounts for accounting purposes.
2. Linked Accounts—Accounts under a master account. They have their own AWS credentials. Their billing is assimilated into a single invoice payable by the master account.
3. Payer Accounts—An AWS account that receives a consolidated invoice for all services consumed by the accounts linked under it.
If you have a linked account, the odds are that you are part of a group of accounts. AWS treats all these accounts as a single account. It means that the consolidated invoice clubs the usage of all common services into a single line item. This lets you take advantage of…

Volume Discounts
AWS S3 has tiered pricing, which means that you pay less per TB of storage when you use more of it.
Consider Bob and Susan are using Data Transfer. If AWS prices Data Transfer at:
 

 
And their usage is:

As per the pricing, they’ll both be billed

Usage*(price per first 10 TB)

Which would be

(8 * 1024) * $0.17: $1392.64, in Bob’s case

(4 * 1024) * $0.17: $696.32, in Susan’s case

What are Blended Rates?
Blended rates are the averaged rates of the Reserved Instances and On-Demand Instances that are used by member accounts in an organization using AWS Organizations. AWS calculates blended costs by multiplying the blended rate for each service with an account’s usage of that service.
If Bob and Susan both have accounts linked under a payer account, they would be charged differently.

The total cost that the payer account owes is calculated as follows:

1. Add the cost of the first 10 TB (10240 GB * $0.17 = $1740.8), to the cost of the next 2 TB (2048 * $0.13 = $226.24) for a total cost of $1967.04.
2. Blended rate is calculated by dividing the total cost ($1967.04) by the amount of storage (12,288 GB), to produce a blended rate of $0.160078125 / GB.
3. Finally, the cost for each linked account is allocated by multiplying the blended rate by the total usage.

Blended Rates Can Pose Challenges for MSPs
If you neither have a Linked account nor are you managing several linked accounts, it doesn’t impact you a lot. However, if you’re either,

1. An MSP managing AWS billing for your customers
2. Managing multiple Linked accounts in your organization

Blended costs can creep up in all sorts of unexpected places, even more so when you have a payer account. The AWS billing console only shows you Blended costs, which makes generating invoices for each Linked account under you.

Centilytics shows you both — Blended and Unblended costs — for each account with an hourly level granularity. This not only gives you a transparent view of costs but also makes invoice management that much simpler. Centilytics offers valuable insights across customer accounts to ensure easy and accurate billing and invoicing. With deeper visibility and more control over AWS environments, MSPs and resellers can be sure they are making better decisions to recognize the true benefits of resource allocation and purchasing while providing greater value to their end customers.

We have various other features that let you manage your AWS billing more effectively. You can start your free trial by clicking here.