Consolidated billing lets the management account of an AWS Organizations organization pay one bill for all its member accounts, at no extra cost. AWS treats all the accounts as one for pricing, so usage combines to reach cheaper volume tiers sooner, and Reserved Instance and Savings Plans discounts can be shared across accounts.
What consolidated billing does
Every organization in AWS Organizations has one management account and any number of member accounts. The management account pays the charges of all the member accounts.
AWS lists four benefits: one bill for multiple accounts, easy tracking of charges across accounts, combined usage across all accounts, and no extra fee. AWS still creates a separate bill for each member account, but it is for information only.
As a best practice, AWS advises against running workloads in the management account, apart from resources needed to manage the organization itself.
Combined usage and volume tiers
Some AWS services are priced in tiers: the unit price drops once your usage in a month passes a threshold. For this, AWS treats all accounts in the organization as a single account. Member accounts don't reach tier thresholds individually. All usage in the organization is added up for each service.
AWS's Amazon S3 example has three member accounts storing 95 TB between them. Billed together, the most expensive first-terabyte tier is charged once. Billed as three separate accounts, it would be charged three times, and the total would be higher.
Usage is measured every month. At the start of each month, service usage resets to zero.
Sharing Reserved Instances and Savings Plans
For billing, all accounts in the organization can receive the discount of a Reserved Instance bought by any other account. AWS applies the discount to the account that bought it first, then to matching usage in other accounts. Savings Plans are shared the same way.
The management account controls this sharing. It can turn discount sharing off for individual member accounts, or define groups of accounts that share. Turning sharing off can raise the monthly bill.
Where the exam catches people
Believing each member account reaches price tiers on its own usage: AWS adds up usage from all accounts in the organization.
Believing consolidated billing costs extra: it is offered at no additional cost.
Believing a Reserved Instance only discounts the account that bought it: by default the discount is shared with matching usage in other accounts in the organization.
Believing a member account or an SCP turns off discount sharing: the management account controls it in the Billing and Cost Management console.
Believing the member account pays its own bill: the management account pays the charges of every member account.