6 Ways to Regain Control of Cloud Costs

The conventional wisdom is that cloud computing saves money by helping companies reduce their IT infrastructure, operational, maintenance and staffing costs.

While that’s often the case, many businesses nonetheless wind up wasting resources and incur runaway costs as they migrate workloads to the cloud. In fact, the 2025 State of the Cloud Report by Flexera finds that, while cloud spend is expected to increase by 28% this year, forecasting remains challenging for organizations, which are exceeding budgets by 17%.

Such cost overruns are particularly troublesome for small to medium-sized businesses (SMBs) and midmarket firms that are already struggling with budget limitations. But, it’s no surprise that cloud cost optimization has become a top technology priority for organizations of all sizes, with 33% of organizations now spending more than $12 million annually on public cloud.

To counteract cost concerns, companies are focusing on cost optimization to recapture the 27% of cloud spend that continues to be wasted, according to Flexera’s 2025 report.

Understanding the True Cost of Cloud Consumption

If companies don’t have a formalized cloud governance framework, they tend to acquire resources on an ad hoc basis and that can invite waste. This informal approach makes it difficult to keep track of cloud spending, and organizations often pay for resources they no longer use but failed to decommission.

Many other variables impact cloud pricing. In some cases, software licensing for cloud instances can be double that of an on-premises deployment. Sales taxes, federal regulatory fees, and administrative fees can increase per-user costs. Pricing models for connecting to cloud resources can also vary dramatically by provider, which makes billing especially unpredictable in multi-cloud environments.

Here are six strategies for gaining more control over your cloud spending:

1. Start With a Clear ROI Analysis. The first step any organization should take before shifting a workload to the cloud is performing proper due diligence on ROI. It isn’t always the case that moving workloads to the cloud will translate into financial savings. Many variables should be considered when calculating ROI, including current infrastructure, licensing and hiring.
2. Create a Formal Cloud Governance Model. A formal cloud governance framework establishes rules, policies and processes that formalize how cloud resources will be accessed, used and retired. Accurately matching cloud resources to workload demands improves resource utilization and minimizes waste.
3. Make Cloud Spending a Shared Responsibility. FinOps, short for financial operations, is a management discipline that involves collaboration between finance, operations and development teams to manage cloud spending. By implementing tools and processes for cost tracking, budgeting and forecasting, businesses can gain insights into their cloud expenses and identify areas for optimization.
4. Take Advantage of Cloud Pricing Discounts. Providers offer a variety of discounts that can significantly reduce cloud costs. For example, reserved instance pricing models offer discounts to customers who reserve cloud resources over a fixed period. Some providers offer tiered pricing models in which the cost per unit decreases as you consume more resources. You might also be able to get discounts by prepaying for a specific amount of usage over a set period.
5. Control Data Egress Costs. Cloud providers typically charge egress fees for moving data out of the cloud, and large data transfers can add thousands of dollars to a company’s monthly bill. These fees can be reduced with a hybrid cloud architecture in which applications are hosted in the cloud, but data is kept on premises.
6. Consider Bringing Some Workloads Back On-Prem. You may find that moving some workloads to the cloud offers no significant performance advantages. Repatriating some applications, data and workloads back to on-premises infrastructure can often improve performance while reducing cloud spending.

Cloud Cost Control Starts with Accountability

It all boils down to careful oversight. When properly managed, the cloud can be a boon for organizations, helping them improve efficiency, accelerate innovation and adapt swiftly to changing business requirements.

There’s no reason to leave this to chance and risk expenses spiraling out of control. If you don’t have those skills in-house, it pays to work with a seasoned partner to “right size” your cloud spending and ensure that your investments deliver the expected value.