5 Rightsizing Approaches for Cloud Cost Optimization: How to Determine Ideal Resource Allocation
Cloud costs can spiral out of control when resources don't match actual usage, yet finding the right balance between performance and efficiency remains challenging for most organizations. This article outlines five proven approaches to rightsizing your cloud infrastructure, featuring insights from industry experts who have successfully optimized resource allocation at scale. These strategies help teams reduce waste, maintain reliability, and align spending with business objectives.
Prioritize Observability, Align to SLOs, Iterate
The rightsizing approach that delivered the best results was usage-driven, observability-first rightsizing, rather than one-time resizing or relying solely on cloud provider recommendations.
Instead of starting with instance types, the focus was on measuring real workload behavior across CPU, memory, network, and request latency using continuous APM and infrastructure metrics. This revealed that many services were sized for rare peak traffic while remaining over-provisioned most of the time.
Resource decisions were aligned with service-level objectives (SLOs) to ensure performance and reliability weren't impacted. Stateless services were downsized at the base level and paired with horizontal autoscaling driven by application signals like request rate and latency, not just CPU usage. For stateful components such as databases and queues, optimization focused on memory usage, connection limits, and IOPS instead of raw compute.
The ideal resource allocation was determined through an iterative feedback loop: resize, observe performance under real and synthetic load, validate against SLOs, and adjust. Continuous monitoring ensured that optimizations remained effective as traffic patterns evolved.
The biggest takeaway: rightsizing is most effective when it is continuous, data-driven, and application-aware, rather than treated as a one-time cost-cutting exercise.
Measure Peaks, Reclassify by Impact, Trim Waste
Okay, so this one's a hard lesson for anyone who's ever tried to get their cloud costs under control. The thing is, the best results come from actually measuring how much you're using your resources, not just making some guess about what you might need.
I actually measured our peak usage over 60 days, and that told me where we could really cut back. We downgraded our always-on instances and moved some of the background workloads to scheduled or auto-scaled resources. It was a real game-changer.
The key is to actually tag every service in terms of business function and how much it really impacts our revenue. If a resource isn't actually serving up uptime, security or growth, it's a good bet it's not essential. And with that mindset, we were able to really start cutting back on waste.
Audit Continuously, Remove Orphans, Inform Allocation
Our most effective rightsizing approach was addressing resource sprawl through continuous monitoring and regular audits. Using Azure Cost Management, we identified and eliminated orphaned resources, which delivered significant savings. These audits guided ideal allocation by showing where capacity was truly needed and where services could be reduced or retired.
Reduce Gradually, Use Load Data, Preserve Stability
The rightsizing approach that worked best for us was cutting based on real usage, not estimates. We reviewed 30 to 60 days of actual CPU, memory, and traffic data and downsized anything that consistently ran under 40 to 50 percent load.
The key was doing it gradually. We reduced resources in small steps, watched performance closely, and only kept what was truly needed. That alone cut our cloud bill fast without breaking anything.
Establish Holistic Baselines, Fit Commitments, Balance Spikes
Effective rightsizing starts with understanding the application and its environment. Determining the right allocation requires a broader view of CPU, memory, storage, network, instance generation, CPU architecture, and how the application operates. That has to be paired with a solid understanding of cloud pricing models, instance families, and purchase options as well.
In simple environments with a small number of instances, rightsizing is often straightforward: identify obvious overprovisioning, move to newer instance generations or smaller instances, and see immediate savings. But as environments grow, so does the complexity. With autoscaling, you have to size for both baseline and burst capacity. Smaller instances may look efficient based on average utilization, but if they can't absorb traffic spikes while additional capacity spins up, you introduce risk.
Context also matters. On AWS, EC2, RDS, and containerized workloads all require different considerations. Before rightsizing anything, you need to understand whether a reservation or savings plan is being applied. In many cases, the optimal move isn't resizing at all, but fitting workloads into underutilized commitments so you capture savings you're already paying for.
Our most effective rightsizing starts by establishing a true baseline. We analyze 30 to 90 days of data looking beyond averages to understand baseline and peak CPU and memory demand. We factor in buffer capacity, review instance generations and families, consider underutilized reservations, and ensure architecture compatibility. From there, we evaluate autoscaling, commitments, and even Spot Instances to make final rightsizing decisions that maximize savings while maintaining performance without introducing new issues.
The bottom line is that there's no single approach or shortcut. Obvious wins exist, but most real-world scenarios are nuanced. Tools can surface the data, but understanding the application and how it intersects with pricing models is what turns rightsizing into sustainable cost optimization.
