Why Unit Cost Must Be Your North Star Metric In The Cloud

You’re a savvy SaaS business leader, so you already know the importance of keeping costs low to maximize your margins.

What you might not have considered, however, is how tracking unit cost in your cloud spend data can help you achieve optimizations far beyond what you’d get with traditional cost-cutting methods.

Keep reading to learn how cloud spend unit costs can drive savings you never knew were possible.

4 Reasons Unit Cost Is Your Best Metric For Optimizing Cloud Spend

1. Unit cost data puts your engineers in the driver’s seat

Ask any finance person in a SaaS company and they’ll likely say that enforcing the cloud budget is one of the toughest aspects of their job. Even if your company employs a dedicated FinOps employee (or team), it can still be difficult to get engineers to stick to an agreed-upon budget for cloud spending.

That’s because the typical engineer believes he or she has one primary job: to build the best software possible using whatever resources are necessary to do the job well. Telling them that their chosen resources cost too much money is likely to create friction.

No engineer wants to build a suboptimal product. Unfortunately, they’ll feel as if you’re asking them to do exactly that if you set a hard budget limit without providing them with tools to make good buying choices.

Tracking unit costs is the ideal solution to this problem. When engineers can see how their choices contribute to the overall cloud bill, they’ll feel more in control of their spending. And when engineers are in control, they are much more likely to stick to the set budget.

2. Tracking unit costs allows you to forecast future spending

Since saving on cloud costs isn’t as simple as lowering your engineering budget, you’ll need to get creative.

Most companies immediately turn to straightforward options such as provider discounts and savings plans. These are a great way to shave some costs off the top of your cloud bill immediately, so we highly encourage clients to take advantage of these programs wherever possible.

Tracking your unit costs is one of the most foolproof ways to decide which savings plans you can afford to jump on without under- or over-committing.

Understanding your unit costs will help you confidently predict your future spending, so you’ll be able to identify the right opportunities when they come along.

3. Discounts can help, but optimizing unit costs is what drives real change

We like to use the analogy that finding discounts is like using scissors to give your cloud bill a haircut. The bill will immediately get smaller, but unless you address the root cause of your snowballing costs, your monthly bill will just grow back larger and larger.

Unit cost data, on the other hand, illuminates the areas of cost inefficiency that are the source of snowballing costs. If you track your unit costs, you’ll know right away when there’s a problem that needs to be fixed, and you can take real control over your monthly spending.

4. Unit cost data helps your engineers make smarter decisions

If traditional savings methods aren’t enough, that means you need to focus on the part of the cloud cost equation that really makes an impact on your bill: engineering-led optimization.

Your engineers hold the power to make smart purchasing choices that drive the desired results without needlessly inflating your cloud bill. The key is that they need to have the right information at their fingertips in order to make those decisions.

Unit costs are the one metric that engineers can use to see in detail what every single change to every product or feature costs the business. When they can see these changes in real-time, they will understand the impact that their choices have on the bottom line.

Over time, this means engineers can train themselves to make the best choices possible for the company when it comes to functionality and cost.

CloudZero Is Your One-Stop-Shop For Using Unit Costs To Optimize Your Cloud Spen.

Not only does the CloudZero platform provide an easy breakdown of unit costs for all stakeholders to see, but our FinOps experts are also always standing by to offer insights and guidance about your best opportunities for optimization.

Partner with us, and you can begin optimizing costs asap.  to see CloudZero in action.

Author Spotlight

Cody Slingerland

Cody Slingerland, a FinOps certified practitioner, is an avid content creator with over 10 years of experience creating content for SaaS and technology companies. Cody collaborates with internal team members and subject matter experts to create expert-written content on the CloudZero blog.