Private pricing (PPA)
Securing an AWS Private Pricing Addendum for 11% lower spend
A data analytics company secured an AWS Private Pricing Addendum (PPA) with stronger terms than AWS's first offer, then layered rate optimization on top for an 11% lower total bill.
The challenge
The company had reached the spend level where AWS offers private pricing, and AWS had made a first PPA offer. The team had no benchmark to judge it against, no reliable forecast to size the commitment, and no clear view of which services mattered most. Signing too large a commitment risked a shortfall payment, and signing too small left savings on the table.
Client profile
- Industry
- Data analytics SaaS
- Cloud provider
- AWS
- Monthly spend
- $450K
- Starting point
- Public pricing, heavy data transfer, S3, and CloudFront usage
Scenarios evaluated
We compared four paths based on an annual spend of about $5.4M. The chosen path combined a well-sized PPA with ongoing rate optimization.
| Option | Commitment required | Bill reduction | Est. annual savings | Risk |
|---|---|---|---|---|
| Stay on public pricing | None | 0% | $0 | No savings at scale |
| Accept AWS's first PPA offer | 3-year spend commitment, AWS-sized | ~3% | ~$162K | Medium: commitment sized above conservative forecast |
| Negotiate the PPA with our analysis | 3-year spend commitment, forecast-sized | 6.5% | $351K | Low: commitment below conservative forecast |
| Negotiated PPA plus managed rate optimizationSelected | PPA as above; 30 days for rate optimization | 11% | $594K | Low: compute savings need only a 30-day commitment |
What we did
Built a service-by-service view of spend, showing that data transfer, S3, and CloudFront made up most of the discountable spend.
Produced a three-year usage forecast with conservative, expected, and growth cases to size the commitment safely.
Benchmarked the first offer against comparable agreements and identified where terms could improve.
Prepared the negotiation brief and supported the client's team through each round with AWS.
Layered managed rate optimization on compute, which the PPA did not cover.
The outcome
Rate optimization on compute reduced costs within the first 24 hours after it was applied, while the PPA was negotiated. Once the PPA took effect in month three, the full 11% reduction appeared on the invoice. The commitment sits below the client's conservative forecast, so there is no realistic risk of a shortfall payment.
Savings tracked in real time
The cost reduction appears on the client's NumeriQ dashboard within the first 24 hours after rate optimization is applied, and savings are tracked continuously. Realized savings by month:
| Month | On-demand equivalent | Actual spend | Savings | Savings rate | Cumulative savings |
|---|---|---|---|---|---|
| Month 1 | $450,000 | $441,000 | $9,000 | 2% | $9,000 |
| Month 2 | $450,000 | $429,750 | $20,250 | 4.5% | $29,250 |
| Month 3 | $450,000 | $400,500 | $49,500 | 11% | $78,750 |
| Month 4 | $450,000 | $400,500 | $49,500 | 11% | $128,250 |
| Month 5 | $450,000 | $400,500 | $49,500 | 11% | $177,750 |
| Month 6 | $450,000 | $400,500 | $49,500 | 11% | $227,250 |
| First six months | $2,700,000 | $2,472,750 | $227,250 | 8.4% | $227,250 |
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