While an EDP applies a flat discount to your entire bill, a Private Pricing Agreement (PPA) negotiates a custom unit price for a specific, high-volume service. Think of it as a bulk-buy contract for a single product category.
How PPAs Work
A PPA changes the rate card for a specific service rather than applying a percentage to the total bill. Instead of paying $0.08/GB for CloudFront data transfer, you negotiate a custom rate of $0.02/GB — a 75% reduction — in exchange for committing to a minimum volume.
Real-world example: A video streaming company pushing 100 Petabytes of data per month through a CDN would find that even a 15% EDP discount leaves enormous money on the table. A PPA targeting data transfer specifically — their single largest cost driver — can unlock discounts that dwarf what the EDP provides on that line item.
PPA vs. EDP: The Key Distinction
| Dimension | EDP | PPA |
|---|---|---|
| Scope | All services, all regions | One specific service |
| Mechanism | % off total bill | Custom unit price |
| Commitment | Total dollar spend | Volume (GB, requests, hours) |
| Best for | Broad cost reduction | Dominant single-service spend |
| Stacking | Yes, stacks with Savings Plans | Yes, EDP can apply on top |
The Optimization Loop
The most sophisticated FinOps teams layer these instruments deliberately:
- Identify your top 3 cost drivers (e.g., data transfer, object storage, compute).
- Negotiate PPAs for those specific services to get the deepest possible unit price reduction.
- Apply the EDP on top of the already-reduced PPA rates for the remaining bill.
- Layer Savings Plans on compute to stack a third discount tier.
This sequencing matters because the EDP discount applies to the post-PPA price. If your PPA already reduced CloudFront from $0.08 to $0.02/GB, the EDP's 12% applies to the $0.02 rate — not the original $0.08. The order of operations is: PPA first, then Savings Plans, then EDP.