How to reduce the cost of the cloud with Microsoft Azure

The evolution of the data center allows us to have solutions completely in the public cloud or hybrid scenarios where, the decision to use resources in the cloud, in addition to functional factors, must necessarily be made taking into consideration the fundamental aspect of costs. This article lists the directions that you can follow to achieve cost savings, maintaining their own application workloads on Azure.

Azure Reservations

The cost of various Azure services is calculated on the basis of resource usage and you can make an estimate of the cost by using the Azure pricing calculator.

If, of Azure resources in the environment, is done a continuous use is possible to evaluate the activation of Azure Reservations.

The Azure Reservation allow you to achieve cost savings up to 72% compared to the pay-as-you-go price , simply prepay in advance for one or three years the use of Azure resources. Currently, Azure resources that allow to obtain these discounts are: virtual machines, Azure SQL Database, Azure Cosmos DB and SUSE Linux. The purchase of this reservation can be made directly from the portal Azure and is feasible for customers who have the following types of subscription:

  • Enterprise agreement: in this area are not contemplated resources residing in Dev/Test subscription. It is possible to draw upon the Azure Monetary Commitment to purchase the Azure Reservation.
  • Pay-As-You-Go.
  • Cloud Solution Provider (CSP): in this case the purchase is feasible even from the Partner Center.

Among the Azure reservation there are:

  • Reserved Virtual Machine Instance: the reservation covers only the virtual machine's computational costs, and it does not cover the additional costs from software installed aboard the VM, from networking, or from storage utilization.
  • SQL Database reserved vCore: also in this case includes only computational costs, while the licenses are billed separately.
  • Azure Cosmos DB reserved capacity: the reservation covers the actual throughput of the resource, but does not cover the expected costs of storage and networking.
  • Suse Linux: saves on SUSE Linux Enterprise license costs.

How to buy the Azure Reservations from the Azure Portal

To purchase Reservations from Azure portal it is possible to follow the procedure given below.

Figure 1 – Adding Azure Reservation from portal and type selection

Figure 2 – Configuration of the parameters required for the Reserved Virtual Machine Instances

Figure 3 – Summary of Azure Reservations purchased

For more details about how the Reservation affect the calculation of Azure costs, you can consult the following Microsoft documents:

Hybrid Benefit

Another option to consider for reducing Azure costs is the use ofAzure Hybrid Benefit, that saves up to 40% on the cost of Windows Server virtual machines that are deployed on Azure. The savings is given from the fact that Microsoft allows you to pay only the cost of Azure infrastructure, while the licensing for Windows Server is covered by Software Assurance. This benefit is applicable both to the Standard and Datacenter version and is available for Windows Server 200 R2 or later.

Figure 4 – Cost structure for a Windows VM

The Azure Hybrid Benefit can be used in conjunction with the Azure Reserved VM Instance, allowing overall savings that can reach 80% (in the case of purchase of Azure Reserved Instance for 3 years).

Figure 5 – Percentages of savings by adopting RIs and Azure Hybrid Benefit

If you are not in the condition to use Azure Hybrid Benefit, the cost of Windows Server licensing is calculated based on usage time of the virtual machine and according to the number of cores.

The Azure Hybrid Benefit can also be used for Azure SQL Database and SQL Server installed on Azure virtual machines. These advantages facilitate the migration to cloud solutions and help to maximize the investments already made in terms of SQL Server licenses. For more information on how you can use the Azure Hybrid Benefit for SQL Server you can view FAQ in this document.

The cost savings, guaranteed by the use of Azure Hybrid Benefits, can be estimated using the tool Azure Hybrid Benefit Savings Calculator.

Recently Microsoft has conducted studies on the costs to be incurred to enable Windows Server and SQL Server in the cloud that highlight how, thanks to the use of Azure Reservations and Azure Hybrid Benefit, AWS is up to 5 times more expensive than Azure. The comparative between Azure and AWS costs is easily possible to evaluate with the instrument Azure vs.. AWS Cost Comparison.


Azure is definitely the most cost-effective choice to host in particular Microsoft workloads, being able to have lower cost thanks to the advantages provided by the Azure Reservation and the Azure Hybrid Benefit. Furthermore, thanks to the tool Azure cost management, made available for free to all Azure customers, you have the ability to monitor and optimize the costs of various Azure services.

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