[nerdjon]

My question (and maybe it is answered there but I don't want to read a full legal document to find it).

What exactly do they consider "costs"? Is it just the cost they pay an IP for data out or can it include maintenance, hardware, people, etc?

I am also curious if this will have any impact on the cost of services. Does AWS do any sort of thing where the higher egress costs offset the cost of services? Or ingress costs, or internal communication costs? Stuff that does cost AWS something to run in some form but could have been paid for by this.

It's a question I honestly don't know, so I am curious.

[proteal]

I don’t work at Amazon nor am I an accountant, but likely your intuition is correct. There’s this managerial accounting strategy called activity based costing (ABC) where you can better map costs (ie real money spent on stuff) to the company outputs; in this case data egress, but it works for all activities (server maintenance, programmer time, etc). You basically take a weighted average of the time and money spent on activities to understand the cost of those activities. This is how Amazon knows the costs of all its services.

The second question is a bit trickier to answer. Amazon has a lot of fixed costs and ABC is one way to allocate those fixed costs (fixed costs = servers). You can also do something similar for the revenues of different AWS services. However, managers will tend to look at revenues and costs together because teasing apart the different revenue streams and their allocated cost structures doesn’t match reality. If you go too deep into that rabbit hole, you lose sight of the true nature of the business. Which is “we buy a shitload of servers up front and rent them to you virtually by the second.” To answer the question, the egress revenue likely dwarfs all the other revenue generating activities at AWS, making the other services look “bad” when comparing revenue to costs. On paper, egress makes up substantially all profit for the business. But this is by design- executives believe that this business model captures the most value so they’re not that interested in jacking up other service costs because overall profitability will be less. Is there subsidization? Yes, but Amazon believes they have the better business by charging users like this vs pricing everything “fairly.”

[afp14]

in cali the power company says "you can use this cost structure or that cost structure, your choice!" - so it's this vile little game where if you choose incorrectly they scalp you, and it takes a bit of arithmetic to compute expected values, power usage at various times of day, etc - something the average joe may not be able to estimate easily. in an ideal world, they would automatically pick the lower of the two.

to a degree I have seen AWS plans work this way, where you choose from options A/B/C and buyer beware if you end up getting scalped.