The Blog

The TurboTax of AWS Billing

Calendar Icon 10.20.2021
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Today, I want to talk about TurboTax.

Yes, while Intuit is a longstanding AWS reference customer, I’m not here to talk about its cloud bills. Instead, I’m going to apply its consumer tax product to how I think about AWS bill savings.

For readers who aren’t in the United States or familiar with the way our taxes work, allow me to oversimplify dramatically. Most people have jobs. Their employers take taxes out of their paychecks. At the end of the year, people file their taxes with the government. “I made X. My employer withheld Y. Here’s a bunch of information that affects my tax rate. I owe you this much money, or you owe me this much in a refund.” The only thing stopping the IRS from doing all of this number-crunching for you is the result of two decades of lobbying by Intuit to protect its business model, but I digress.

Thanks, professor, now get to the cloud part

If you use Intuit’s TurboTax product, it asks you for a whole bunch of information through a very long process. This part isn’t TurboTax’s fault. If you’re a disabled veteran, you get certain tax treatments. If you have children, you get both tax credits and gray hair. You get the picture.

TurboTax keeps track of what your shortfall or refund is with a counter that updates as you fill in your information. Positive numbers are green, negative numbers are red. Let’s ignore that the implied congratulation of “Good job, that’s a big refund!” completely glosses over the fact that you’re providing an interest-free loan to the government as well.

The gamification of the refund amount and TurboTax’s marketing of the “maximum refund guarantee” is what I want to draw attention to here. You don’t just want the “maximum refund,” because the prize for that is called “federal prison.” You want the most accurate tax filing — hopefully backed by TurboTax’s “100% accurate calculations guarantee” — that claims every deduction to which you are entitled and none of the deductions to which you are not.

This is, of course, a natural analogy for cutting your cloud spend bill.

Can you run that one past me again?

There’s a common misconception that the work we do at The Duckbill Group is about cutting clients’ AWS bills. While that’s the outcome in virtually every consulting engagement, it’s a byproduct of what we’re actually doing: optimizing the cloud bill.

Cloud cost and cloud architecture are the same thing. By improving durability and reliability, you’re increasing costs. You might not need your Twitter for Pets app to survive four AWS regions going down simultaneously. Conversely, you probably want your banking records to be a bit more durable than someone deleting the wrong database instance, and thus you should spend more on backup.

Let’s be clear here: I’m not suggesting that you set money on fire! My point is that you should be aiming for the correct level of cloud spend, not the lowest level of cloud spend. You can drop the AWS bill to zero by migrating it to another cloud provider or IBM “Cloud,” but that’s not exactly a recommendation that solves anything for you.

What to do when business models incentivize bad behavior: Stop, think, run far away

If you ever encounter a tax preparation company that offers to only charge you a percentage of your refund, you should immediately run screaming out the door. Similarly, I’ve never quite grasped the idea of cloud cost optimization pricing models that only charge you a percentage of your AWS bill or a percentage of the savings found for you. It seems like incentivizing a whole lot of behaviors and findings that turn “This is what I would do if I were in your position” to “Here’s what you should do because I’ll get to buy a boat.”

I get a lot of flak for our fixed-fee consulting pricing model in some quarters, but after five years of digging into it, it’s the only thing I’ve found that makes sense.

Plus, I really don’t want to discover the cloud computing equivalent of winning an all-expenses-paid trip to prison for tax evasion.

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