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Using cost models

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Cost Management Service 1-latest

Configuring cost models to reflect your cloud costs

Red Hat Customer Content Services

Abstract

This guide explains the cost model feature, configuration and related terminology. Cost management is part of the Red Hat Insights portfolio of services. The Red Hat Insights suite of advanced analytical tools helps you to identify and prioritize impacts on your operations, security, and business.

Chapter 1. Using cost models and analyzing your usage

You can use cost models in cost management to apply a price to usage in your hybrid cloud environment, then distribute the costs to resources.

1.1. What is a cost model?

It can be difficult to determine the real cost of cloud-based IT systems. Different integrations provide a variety of cost data and metrics, which make it complicated to calculate and accurately distribute costs. A cost model is a framework that cost management uses to determine the calculations to apply to costs. With a cost model, you can associate a price to metrics provided by your integrations and charge for utilization of resources.

In some cases, costs are related to the raw costs of the infrastructure, while in other cases there is a price list that maps usage to costs. Your data must be normalized before you can add a markup to cover your overhead and distribute the charges to your resources or end customers. With a cost model, you can better align costs to utilization: customers that use a resource more will be charged more.

A cost model can have multiple different integrations assigned to it, but a single integration can be mapped to only one cost model.

1.2. Cost model concepts

The following terms are important for understanding the cost management cost model workflow:

Cost model
A cost model is a framework that defines the calculations that cost management uses for costs. Cost models use raw costs and metrics and can help with budgeting, accounting, visualization, and analysis. In cost management, cost models provide the basis for the cost information that users view. You can record, categorize, and allocate costs to specific customers, business units, or projects.

1.2.1. Cost model terminology

Markup

The portion of cost that is calculated by applying markup or discount to infrastructure raw cost in the cost management application

Example: For a raw cost of $100 and a markup of 10%, the markup would be $10, and the cost would be $110 (sum of both).

Request
The pod resources requested according to OpenShift
Usage
The pod resources that were used according to OpenShift
Usage cost

The portion of cost calculated by applying hourly or monthly price list rates to metrics

Example: For a metric of 100 core-hours and a rate of $1/core-hour, the usage cost would be $100.

Effective usage
The pod resources used or requested each hour, whichever is higher
Monthly cost

The portion of cost calculated by applying monthly price list rates to metrics returned as part of usage cost. Monthly cost can be configured for OpenShift nodes or clusters in a cost model to account for subscription costs, for example.

Monthly costs are currently shown as part of the usage costs in the cost management API and interface.

Note

These costs are not currently amortized over the reported period in the API, so when viewing a daily breakdown of cost, monthly costs will only show on the first of the month.

Example: For an OpenShift cluster with 10 nodes at a rate of $10,000 per node per month, the monthly cost would be $100,000.

Price list
A list of rates used within the application’s cost model to calculate the usage cost of resources
Distributed costs
The costs calculated by the cost model are distributed to higher level application concepts, such as project, account, service, and so on. How the costs are distributed depends on the cost type (infrastructure or supplementary) assigned in the cost model.
Count (cluster)
The distinct number of clusters that are identified during the month
Count (nodes)
The distinct number of nodes that are identified during the month
Count (persistent volume claims)
The distinct number of volume claims that are identified during the month

1.3. The cost model workflow

The following diagram shows the cost model workflow that cost management uses to apply a price to metrics and inventory, normalize cost data from different integrations, apply a markup (or discount), then distribute the costs across the relevant resources.

The cost model also helps differentiate raw costs from the costs used in cost management.

Diagram described by the following paragraph

  1. Cost management collects cost data from several integrations:

    • Inventory - All the resources that have ever run in your integration, including those that are no longer in use. For example, if your OpenShift Container Platform environment contains a node that is not in use, that node still costs $x amount per month. There are several ways to collect inventory data into cost management: cost management can generate inventory from the AWS data export, Azure or Google Cloud export, or OpenShift Metering Operator reports.
    • Metrics - A subset of the OpenShift inventory showing usage and consumption for each resource.
    • Cloud raw costs - AWS, Azure, and Google Cloud provide regular reports to cost management listing consumption of resources and their costs, which cost management uses for calculations. As a result, configuring a custom price list is not necessary for cloud integrations.
  2. The cost model allows you to apply a markup or discount of your choice to account for other costs and overhead, and provides options for assigning a cost layer (infrastructure or supplementary) to costs:

    1. For OpenShift Container Platform integrations - Since the metrics and inventory data do not have a price assigned to usage, you must create and assign a price list to your integrations to determine the usage cost of these resources. A price list includes rates for storage, memory, CPU usage and requests, and clusters and nodes.
    2. For AWS, Azure, and Google Cloud integrations - You can create cost models for these integrations to account for any extra costs or overhead in your environment by applying a markup percentage, or a negative percentage to calculate a discount.
  3. Costs from integrations are then collected together and allocated as infrastructure cost and supplementary cost.
  4. The cost is then distributed to resources across the environment. Depending on your organization, these resources may include OpenShift projects, nodes, or clusters, and cloud integration services or accounts. You can also use tagging to distribute the costs by team, project, or group within your organization.
Note

For more information about configuring tagging for cost management, see Managing cost data using tagging.

1.4. Analyzing unused cluster and node capacity

You can analyze your cluster usage with cost management by examining the unrequested capacity and unused capacity of your cluster. The unrequested capacity identifies how much of the requested resources are being used in the cluster. When this value is high, there are nodes in your cluster that are requesting more resources than it uses. You can find the nodes that are responsible and adjust your requests to make your cluster usage more efficient. However, the usage can exceed the amount requested, so the unused capacity can help you to understand if you should adjust the overall capacity.

Request
The pod resources requested, which OpenShift reports.
Unrequested capacity
is the requests minus the usage.
Effective usage
The pod resources used or requested each hour, whichever is higher.
Unused capacity
is the capacity minus the effective usage.

For more information, see Section 1.2, “Cost model concepts”.

Prerequisites

Procedure

  1. Log in to the Red Hat Hybrid Cloud Console.
  2. From the Services menu, click Spend ManagementCost Management.
  3. To view unused cluster capacity and unrequested cluster capacity:

    1. In the Global Navigation, click Cost ManagementOpenShift.
    2. On the OpenShift details page, in the Group By menu, select Cluster. Filter by Cluster, then select a cluster from the results.
    3. On the Cost overview tab, you can see your unused capacity and unrequested capacity in the CPU tile. If the unrequested capacity is higher than your unused capacity, or the unrequested core-hours are too high as a percentage of capacity, you can search for the nodes in your cluster that are responsible.
  4. To view unused node capacity and unrequested node capacity:

    1. In the Global Navigation, click Cost ManagementOpenShift.
    2. On the OpenShift details page, in the Group By menu, select Node. Filter by Node, then select a node from the results.
  5. If the unrequested capacity is higher than your unused capacity, or the unrequested core-hours are too high as a percentage of capacity for your node, you can adjust them in your cloud service provider to optimize your cloud spending.

1.5. Understanding cost distribution in cost management

Costs can belong to three different groups:

Platform costs
Costs that incur from running the OpenShift Container Platform. Platform costs include the cost of all projects with the label Default. These namespaces and projects contain openshift- or kube- in the name. These projects were not created by the user but are required for OpenShift to run. You can optionally add namespaces and projects to platform costs. For more information, see Section 1.5.3, “Adding OpenShift projects”.
Worker unallocated costs
Costs that represent any unused part of your worker node’s usage and request capacity.
Network unattributed costs
Costs associated with ingress and egress network traffic for individual nodes.

1.5.1. Distributing costs

To configure the distribution of platform and worker unallocated costs into your projects, you can set costs to Distribute or Do not distribute. When you create a cost model, the costs are set to Distribute by default. This default setting means that the cost of the Platform projects are set to zero.

The costs distribute into your project costs according to the sum of the effective CPU or the Memory usage of your cost model. Most users use the default Distribute setting to track platform and worker unallocated costs for their organizations.

If you instead set the costs to Do not distribute, the costs of each Platform project are displayed individually instead of spread across all of the projects. The worker unallocated cost still is calculated, but it appears as an individual project in the OpenShift details page. With this option, you cannot see how the costs would distribute to user projects.

You can always distribute platform or worker unallocated costs independently of each other, or you can choose to distribute none of them.

1.5.2. Calculating costs

Cost management uses effective usage to calculate both platform and worker unallocated costs, in addition to project costs.

To distribute platform costs, cost management uses the following formula:

(individual user project effective usage) / (sum of usage for all user project's effective usage) * (platform cost)

To distribute worker unallocated costs, cost management uses the following formula:

(individual user project effective usage) / (sum of usage for all user project's effective usage) * (worker unallocated cost)

1.5.3. Adding OpenShift projects

In cost management, the Group named Platform has default projects that you cannot remove. These projects start with the prefixes openshift or kube and have a Default label in the OpenShift details page. You can add your own projects to the Platform group so that you have control over what is considered a platform cost. Any projects that have the cost of some Platform projects have the Overhead label.

For example, you might have a cost that you consider overhead and that you want to show up as a platform cost. You can add the cost to your Platform projects to distribute the costs according to your cost model.

Prerequisites

  • You must have a cluster that has a cost model set to Distribute.

Procedure

To add OpenShift projects to the Platform group, complete the following steps:

  1. In Settings in cost management, click the Platform projects tab.
  2. Select a project to add to the Platform group.
  3. Click Add projects.

The project now has the label Platform, but not the label Default.

Verification

Complete the following steps to verify that your costs are distributing properly:

  1. In cost management, click OpenShift to open the OpenShift Details page.
  2. Select the cluster whose project you edited in the previous steps.

The project should display a cost of $0 because you set the cost to distribute across all other projects. A project with the label Overhead includes the cost of that project plus the default project costs.

Chapter 2. Setting up a cost model

Configure cost models in cost management based on your requirements.

2.1. Applying a markup or discount to cloud integrations

Create a AWS, Azure, or Google Cloud cost model to apply a markup or discount to your cloud infrastructure costs.

As cloud infrastructure integrations (AWS, Azure, or Google Cloud) collect cost and usage data into cost management with prices already assigned, you only need to assign a markup or discount (if desired) to accurately reflect your costs.

Adding a markup to your raw costs can allow you to account for your overhead costs, such as the cost of administering your AWS account, Azure subscription, or other support costs. A markup is an estimation to cover your costs not shown by metrics or usage.

The following example shows how to add a 10% markup to the information collected from the AWS Cost and Usage Reports. The same method can be used to apply a markup or discount to your Azure or Google Cloud costs.

Note

Creating, editing, or deleting a cost model only updates calculations starting from the first day of the current month.

Prerequisites

Procedure

  1. From cost management, click Cost ManagementSettings.
  2. In the Cost models tab, click Create cost model to open the cost model wizard.
  3. Enter a name and description for the cost model, and select Amazon Web Services (AWS) as the integration type to apply the cost model to. Click Next.
  4. To apply a 10% markup to the base costs of your resources, enter 10 in the as the Markup rate and click Next.

    Note
    • To apply a discount rather than a markup, enter a minus sign with the value (for example, -15).
    • If you do not want to apply a markup or discount, enter 0.
  5. Select one or multiple AWS integrations to assign the cost model to and click Next. Selecting a integration with a cost model already assigned will override its previous cost model. You can also assign integrations to your cost model at a later time.
  6. Review the cost model details, and click Create.
  7. Click Close to exit the cost model wizard.

Your new cost model will appear in the list on the Cost models page.

Next steps

  • From the Cost models summary page, you can review information about your cost models, including:

    • The integration type the cost model was created for
    • The number of integrations assigned to the cost model
    • The date the cost model was last modified
  • To assign, edit, or see more information about a cost model:

    • From the Cost models summary page, click a cost model name to open the details page where you can edit the cost model, including integration assignments, markup, and other Settings.
  • To delete a cost model:

    • From the Cost models summary page, click More options More options icon , then Delete.
  • Review your tags and tagging strategy to ensure that costs are being distributed to the correct resources, cost centers, or teams. See Managing cost data using tagging for more information.

2.2. Creating a cost model for an OpenShift Container Platform cluster

Because metrics and inventory from OpenShift Container Platform integrations do not have costs associated, you must create a cost model to associate a price to resources.

Creating a cost model for an OpenShift integration includes assigning prices for usage and requests using CPU, memory, node, networking, cluster, storage, or persistent volume claim metrics, and applying a markup or discount to determine the total costs of your OpenShift infrastructure. You can also use tags to measure costs for specific parts of your infrastructure, such as storage methods. For more information about tagging in cost management, see Managing cost data using tagging.

The following example shows how to design and apply a cost model for an OpenShift Container Platform cluster on cloud infrastructure such as AWS or Azure. The cloud infrastructure costs display in cost management as part of the cluster cost. Because of the way it is displayed, you must cretae a cost model to distribute the underlying infrastructure cost to accurately reflect the costs of running the cluster.

Note

Creating, editing, or deleting a cost model only updates calculations starting from the first day of the current month.

Prerequisites

Procedure

  1. From cost management, click Cost ManagementSettings.
  2. In the Cost models tab, click Create cost model to open the cost model wizard.
  3. Enter a name and description for the cost model, and select OpenShift Container Platform as the integration type to apply the cost model to. Click Next.
  4. Create a price list so you can assign rates to usage or requests. The cost management service collects these metrics from OpenShift but there is no cost attached to them in cost management until you apply a cost model. You can also create your price list later.

    1. To apply a monthly node cost of $1,000:

      1. Click Create rate.
      2. For Metric, select Node.
      3. For Measurement, select Count (node-month).
      4. The cost management service classifies node and cluster costs as infrastructure costs by default. To change the cost type you are calculating, select it under Calculation type. See Key concepts to learn more.
      5. In the Rate field, enter 1000 to assign a $1,000 per price to each node in the integrations you select (in a later step).
      6. Click Create rate to save the node rate.
    2. To apply a rate to CPU requests:

      1. Click Create rate.
      2. For Metric, select CPU.
      3. For Measurement, select Request (core-hours).
      4. The cost management service classifies metrics-based data such as CPU requests as supplementary costs by default. To change the cost type you are calculating, select it under Calculation type. See Key concepts to learn more.
      5. In the Rate field, enter 0.09 to apply a $0.09 cost to each core-hour of CPU requests.
      6. Click Create rate to save the CPU request rate.
    3. To apply tag-based rates to persistent volume claims:

      1. Click Create rate.
      2. For Metric, select Persistent volume claims.
      3. For Measurement, select Count (pvc-month).
      4. The cost management service classifies persistent volume claim rates as infrastructure costs by default. To change the cost type you are calculating, select it under Calculation type. See Key concepts to learn more.
      5. Select Enter rate by tag.
      6. Enter a tag key in the Filter by tag key field.
      7. Enter a Tag value and Rate. You can select Default to specify a rate as default for that tag key.

        Note
        • Specifying a default rate will apply that rate to all tag values for the corresponding tag key that are not defined. You can enter a rate of 0 for any tag value that you do not want the default rate applied to.
      8. Click Add more tag values to add as many tag values as you require.
      9. Click Create rate to save the persistent volume claim rates.
    4. Add additional rates by repeating the previous steps, or click Next to finish configuring your price list.
  5. If desired, set a markup or discount. To apply a 10% markup to the base costs of your resources, enter 10 in the as the Markup rate and click Next.

    Note
    • To apply a discount rather than a markup, enter a minus sign with the value (for example, -15).
    • If you do not want to apply a markup or discount, enter 0.
  6. On the Cost distribution page, select the CPU or Memory distribution type. The distribution type distributes costs based on CPU or memory metrics in project cost breakdowns. If your cluster has high memory usage, select Memory. If your cluster has high CPU usage, select CPU.
  7. On the Cost distribution page, select whether or not to distribute your Platform or Worker unallocated costs into your projects and click Next.
  8. Select one or multiple OpenShift integrations to assign the cost model to and click Next. Selecting a integration with a cost model already assigned will override its previous cost model. You can also assign integrations to your cost model later.
  9. Review the cost model details, and click Create.
  10. Click Close to exit the cost model wizard.

Your new cost model will appear in the list on the Cost models page.

Next steps

  • From the Cost models summary page, you can review information about your cost models, including:

    • The integration type the cost model was created for
    • The number of integrations assigned to the cost model
    • The date the cost model was last modified
  • To assign, edit, or see more information about a cost model:

    • From the Cost models summary page, click a cost model name to open the details page where you can edit the cost model, including integration assignments, price list, markup, and other Settings.
  • To delete a cost model:

    • From the Cost models summary page, click More options More options icon , then Delete. .
  • Review your tags and tagging strategy to ensure that costs are being distributed to the correct resources, cost centers, or teams. See Managing cost data using tagging for more information.

2.3. Calculating effective usage with cost models

Cloud providers charge for the infrastructure costs of running a cluster, regardless of your overall usage. By calculating the effective usage in cost management, you can more accurately correlate cloud costs with a pod or namespace by considering their direct utilization.

A pod typically requests resources, such as CPU or memory, from a cluster. The cluster then reserves these requested resources as a minimum, but the pod might use more or less than it initially requested. The effective usage metric in cost management uses whichever kind of usage, CPU or memory, is greater per hour.

You can create a cost model in cost management to estimate your effective usage. Ultimately, you can use this data to understand how infrastructure cost is distributed to your OpenShift project.

Prerequisites

Procedure

  1. Log in to Red Hat Hybrid Cloud Console.
  2. From the Services menu, click Spend ManagementCost Management.
  3. In the Global Navigation, click Cost ManagementSettings.
  4. In the Cost Models tab, click Create cost model to open the cost model wizard.
  5. Enter a name and description for the cost model and select OpenShift Container Platform as the integration type. Click Next.
  6. Create a price list so that you can assign rates to usage or requests. The cost management service collects these metrics from OpenShift but there is no cost attached to them in cost management until you apply a cost model.

    1. To create a price list to calculate effective CPU usage, click Create rate.

      1. Add a description. In this example, enter effective cpu usage.
      2. In the Metric field, select CPU.
      3. In the Measurement field, select Effective-usage (core-hours).
      4. In the Rate field, enter the rate you pay for CPU usage. In this example, enter 2. Click Create rate.
    2. To create a price list to calculate effective memory usage, click Create rate.

      1. Add a description. In this example, enter effective memory usage.
      2. In the Metric field, select Memory.
      3. In the Measurement field, select Effective-usage (GiB-hours).
      4. In the Rate field, enter the rate you pay for memory usage. In this example, enter 1. Click Create rate.
  7. Click Next.
  8. (Optional) On the Cost calculations page, apply a markup or discount to change how raw costs are calculated for your integrations. Adding a markup to your raw costs can allow you to account for your overhead costs, such as the cost of administering your AWS account, Azure subscription, or other support costs. A markup is an estimation to cover your costs not shown by metrics or usage.
  9. On the Cost distribution page, select the CPU or Memory distribution type. The distribution type distributes costs based on CPU or memory metrics in project cost breakdowns. If your cluster has high memory usage, select Memory. If your cluster has high CPU usage, select CPU. Click Next.
  10. Assign an integration to your cost model and then click Next.
  11. Review the details and then click Create.
  12. To review the results of your cost model on a integration, in the Global Navigation, click Cost ManagementOpenShift.
  13. Select a project and view the results.

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