This chapter explains how AWS, Azure and Google Cloud turn metered usage into an invoice: which line items the document carries, which cost measure a number means, how credits, periods, currencies and accounts move the amount, and why the invoice and the export rarely match to the cent. It is the ground every later question about allocation, budgets or savings stands on, because all of them work from the same numbers.

What this chapter covers

The first part takes the invoice apart. Which legal entity issues it, which period it covers, how the line items are grouped and where tax and credits sit differs by provider and, on Azure, by agreement type; the question underneath is what the document proves and what it does not. Next comes how usage, rate and unit become a line item, and what a line says when quantities and rates have several tiers. Then the cost measures: list, billed, effective and amortized cost answer four different questions, and a report has to say which one it shows. Credits, refunds and corrections show how an amount moves after the fact; billing periods and cut-off, when a piece of usage lands on which invoice; invoice currency and exchange rates, why a service priced in US dollars fluctuates in euros or pounds.

The second part covers the account. Billing accounts and hierarchies explain who pays for whom and how organizations, billing profiles and billing accounts pool discounts and invoices. Marketplace purchases and support plans are line items with rules of their own and often documents of their own. Free tiers and introductory credits lower the bill within limits and dates of their own. Enterprise agreements and private pricing, finally, move the list price without changing the mechanics behind it.

Every page follows the same shape: how the mechanism works, how the providers document it, what it does on the invoice, in the billing data and in a report, and where teams get it wrong. This chapter stays with the invoice and the accounts; the export formats that deliver the data behind the invoice are the next chapter's subject.

Key terms

  • Effective cost: the measure this chapter uses for the value of a piece of usage after every discount and every spread commitment.
  • Amortized cost: the providers' name for spreading a purchase paid up front across the usage it covers.
  • FOCUS: the specification whose BilledCost, EffectiveCost, ListCost and ContractedCost columns the chapter uses as its provider-neutral reference.
  • Cost report: the presentation that has to say whether it rests on the invoice or the export, the invoice month or the usage month.
  • File import: the route by which an invoice or an export reaches an analysis without a connected account.
  • Data transfer: the line item type where usage, unit and rate most often behave differently from what the invoice suggests.

Neighbouring chapters

The chapter before, FinOps and cloud cost management, supplies the vocabulary and explains why FinOps starts with the invoice; this chapter assumes those terms and shows the mechanics. The chapter after, Billing data and standards, brings in the data behind the invoice: the exports from AWS, Azure and Google Cloud, FOCUS as the common format, and the questions only the export answers. Pricing models and commitments continues what appears here only as a line item: how reservations, Savings Plans and committed use discounts come about and when they pay off. Europe: currency, tax and sovereignty takes up the three subjects this chapter deliberately keeps short: the invoice currency, VAT and the providers' European legal entities. The overview of all chapters is in the handbook.