Why are AWS Tags Useful?

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Everyone thinks they use AWS tags well, but there are some misconceptions about tags and their uses. Tagging services is a best practice of DevOps and Cloud Finance Control. However, it’s unclear what the main purpose of tags are and if you ask five people, you will get five completely different answers. 

AWS explain in their documentation that tags are used to:

“Help you manage your instances, images, and other Amazon EC2 resources, you can assign your own metadata to each resource in the form of tags. Tags enable you to categorize your AWS resources in different ways, for example, by purpose, owner, or environment”.

Yes, you can categorise stuff, but why would you need to? In my opinion, all tags share a common purpose: to allow non-AWS communication in an AWS world. Tags are the end-customers words in an AWS country. They’re like a slang that only you and your organisation understand. There are two types of tags called Tags and Cost Allocation Tags.


Tags help communicate how pure-AWS elements fit into your operational processes. In other words, Tags mainly help other systems make the right decisions. For example, what to turn-off after hours (Environment = dev). 

Cost Allocation Tags

Cost Allocation Tags are the only information that AWS customers can use to communicate financially relevant information through the cost and usage report, and get insights in financial reporting tools like AWS cost explorer or through Strategic Blue’s Financial Dashboard. 

Using Cost Allocation Tags is the only way to get Business Insights that matter to you and your organisation without analysing  complicated and error-prone Excel files to translate AWS slang into something understandable for your organisation.


  • There are many misconceptions about tags and what they’re used for.
  • AWS documentation explains that tags help businesses categorise their AWS resources.
  • The two types of tags are called Tags and Cost Allocation Tags. Tags help systems make the right decisions and Cost Allocation Tags help customers communicate financially relevant information.

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