What is chargeback?

In cloud financial operations (FinOps), a chargeback is the process of connecting cloud costs with the teams or users that incurred them. Effective chargeback strategies increase cloud visibility and help teams manage cloud costs.

As cloud adoption increases, managing costs is becoming as important as the cloud services themselves. With departments, teams, and individuals now using cloud services, chargeback processes help organizations map consumption costs to specific users. Key benefits of chargebacks include the following:

Chargebacks enable FinOps teams to see what resources are being used, how much they cost, and who's using them. This makes it possible to assign costs and allocate funds to departments, teams, or individuals based on their cloud usage patterns.

Chargebacks help users take responsibility for their resource consumption. With countless cloud services available, it's easy for users to spin up cloud instances or deploy applications, use them once, and forget about them.

Chargebacks can boost efficiency by identifying areas of overspending or underusage. For example, if several teams run different versions of the same cloud application, a shared deployment could reduce costs.

To create and implement successful chargebacks, the following three components are critical:

In-depth cloud resource allocation ensures chargebacks can link to the correct source.

Department, team, and individual workloads are treated separately, with team and department chargebacks shared across users.

Communication around usage patterns helps ensure chargebacks align with operational needs.