Why Most Companies Overpay for Cloud by 40-60% (And How to Fix It)

Moving to the cloud was supposed to save money. For most companies, it has done the opposite.

I have reviewed cloud spending for dozens of organizations over the past five years. The pattern is remarkably consistent: companies are paying 40-60% more than they need to. Not because cloud is expensive- but because nobody is watching the bill.

How the overspending happens

When companies migrate to AWS, Azure, or Google Cloud, the initial focus is on making things work. Get the applications running. Hit the deadline. Move on to the next project.

This is understandable. But it creates a problem. Resources get provisioned for peak load and never scaled down. Development environments run 24/7 when they are only used during business hours. Storage accumulates because deleting things feels risky. Reserved instance discounts go unused because someone needs to actively manage them.

Twelve months later, the finance team asks why cloud costs have tripled. The technical team says this is just what cloud costs. Everyone assumes it is normal.

It is not normal. It is waste.

What 40-60% savings actually looks like

In a recent engagement, I reviewed cloud infrastructure for a mid-sized technology company. They were spending approximately €52,000 per month on AWS.

Within three weeks, we identified:

• Development and staging environments running continuously (needed only 10 hours per day)

• Production instances sized for traffic peaks that occurred twice per year

• Unattached storage volumes from decommissioned projects

• No reserved instance coverage despite predictable baseline workloads

After implementing changes (most of which required no architectural modifications) their monthly spend dropped to €21,000. That is €31,000 per month in savings, or €372,000 annually.

The technical work took less than two weeks. The ROI was immediate.

Why this keeps happening

Cloud cost optimization falls into a gap between teams. Finance sees the bill but cannot interpret it. Engineering can interpret it but has other priorities. Nobody's bonus depends on reducing cloud spend.

Additionally, cloud pricing is deliberately complex. AWS has over 300 price points for EC2 alone. Reserved instances, savings plans, spot pricing, committed use discounts - each provider has different mechanisms, and they change frequently.

Most companies do not have someone whose job is to understand this. So the waste continues.

What to do about it

If you suspect you are overpaying for cloud (and if you have not done a systematic review in the past 12 months, you probably are)here is where to start:

1. Get visibility first. You cannot optimize what you cannot see. Implement tagging so you know which teams and projects are driving costs.

2. Review instance sizing. Most production workloads are over-provisioned. Look at actual CPU and memory utilization over 30 days.

3. Implement scheduling. Non-production environments do not need to run at night or on weekends.

4. Evaluate commitment discounts. If your baseline is predictable, reserved instances or savings plans typically offer 30-40% discounts.

5. Set up alerts. Catch anomalies early before they become expensive surprises.

This is not glamorous work. But it is work that pays for itself many times over.

A note on priorities

Cloud cost optimization is not always the most important thing. If you are a startup racing to find product-market fit, spend the money and move fast. If you are mid-migration, finish the migration first.

But if you are an established company with stable cloud workloads and you have never done a systematic cost review - you are likely leaving significant money on the table.

If you would like an independent assessment of your cloud spending, I offer a fixed-fee cloud cost review.

No ongoing commitment required. If we do not find meaningful savings, you have lost nothing but a few hours of conversation.