Optimise for Cost
Ensuring profitability by monitoring cost per customer and per engineer.
Cost Optimization System
Core Metrics
1. Cost per Customer
- Customer Acquisition Cost (CAC)
- Customer Lifetime Value (CLV)
- CAC/CLV Ratio
- Cost per Active User
2. Cost per Engineer
- Infrastructure cost per engineer
- Tooling and license costs
- Support and operational overhead
- Training and development costs
3. Cloud Unit Cost
- Cost per transaction
- Cost per compute unit
- Storage efficiency metrics
- Network cost optimization
FinOps Practices
1. Resource Management
- Right-sizing infrastructure
- Automated scaling policies
- Resource tagging by team
- Cost allocation models
2. Cost Visibility
- Real-time cost dashboards
- Team-level cost reporting
- Anomaly detection
- Trend analysis
3. Optimization Strategies
- Reserved instance planning
- Spot instance utilization
- Storage tier optimization
- Network cost reduction
Implementation Guide
First 30 Days
- Establish baseline metrics
- Set up cost monitoring
- Implement resource tagging
60-90 Days
- Deploy FinOps tools
- Train teams on cost awareness
- Implement optimization policies
Beyond 90 Days
- Regular cost reviews
- Continuous optimization
- ROI tracking
Anti-patterns
1. Cost Blindness
❌ Problem: Teams unaware of costs ✅ Solution: Cost visibility and education
2. Over-optimization
❌ Problem: Sacrificing quality for cost ✅ Solution: Balance cost vs. value
3. Silos
❌ Problem: Disconnected cost management ✅ Solution: Cross-functional FinOps team
Integration Points
With Other Practices
- Aligns with Flow Optimization
- Supports Mission & Objectives
- Complements Team Structure
With Tools & Systems
- Cloud cost management tools
- Resource monitoring systems
- Financial reporting platforms
Related Topics
Pro Tip: Focus on unit economics rather than absolute costs. The goal is to optimize the cost-to-value ratio, not just reduce costs.
Further Reading
- “Cloud FinOps” by J.R. Storment
- “The Phoenix Project” by Gene Kim
- “Cost Optimization in the Cloud” by AWS