Cloud Cost Allocation with Tags: The Complete Tagging Strategy for AWS, Azure and GCP

Why Tagging Strategy Matters

Without proper tagging, you know how much you're spending on cloud — but not who is spending it or why. Effective cost allocation tagging enables FinOps, chargeback, and informed optimisation decisions.

Recommended Tag Schema

Enforcing Mandatory Tags

AWS — Service Control Policies

Use AWS Organizations SCP to prevent resource creation without required tags:

{
  "Condition": {
    "Null": {
      "aws:RequestedRegion": "false",
      "aws:TagKeys/Environment": "true"
    }
  }
}

Azure — Azure Policy

Apply a "Require tag on resources" policy at Management Group scope. Non-compliant resources are flagged and can be prevented from creation. Azure's "inherit tag from resource group" policy automatically tags child resources.

GCP — Organization Policy

Use Organization Policies to require labels on resource creation. GCP's label inheritance means projects can automatically apply default labels to all resources.

Cost Allocation Reporting

Handling Shared/Untaggable Resources

Some costs can't be tagged: data transfer, Route53 queries, support plans. Handle these with:

1. Define a "Shared" cost centre for unallocable spend
2. Distribute shared costs proportionally by team's direct spend ratio
3. Exclude infrastructure-level costs from team chargeback and manage centrally

Terraform Tag Automation

Add default tags to all resources via Terraform's provider default_tags:

provider "aws" {
  default_tags {
    tags = {
      Environment = var.environment
      Team        = var.team
      ManagedBy   = "terraform"
      Project     = var.project
    }
  }
}

Implement tagging enforcement via policy on day one — it's exponentially harder to retrofit tags to a large existing environment than to require them from the start. Every untagged resource is cost intelligence you'll never recover.