AWS Relational Database Service (RDS) offers managed PostgreSQL database hosting with enhanced functionality and reduced administrative overhead. However, accurately estimating RDS costs can be complex due to various factors such as data transfer, backup, and extra features. To estimate RDS costs effectively, developers should use the AWS Pricing Calculator, calculate instance cost, storage costs, data transfer costs, backup costs, and consider additional feature costs. Additionally, they should factor in support costs and revise their architecture to optimize costs. An alternative solution is Timescale, a PostgreSQL-compatible hosted database optimized for time-series data, which can save up to 95% on storage costs while achieving better performance and scalability.