How to Optimize Cloud Costs with Azure Reserved Instances

Azure Reserved Instances

Managing cloud tasks can be a considerable challenge, given the complex nature of cloud resources. Azure has many services and resources that can escalate costs if not well managed. As a result, Azure Reserved Instances help users optimize costs effectively.

You can use Azure Reserved Instances to access cloud compute capacity at up to a 72% discount in exchange for a long-term commitment. The typical pay-as-you-go model is not ideal for larger workloads as this makes cloud costs escalate as you allocate more resources. Reserved Instances, (RIs), are one of Azure’s most effective pricing models.

With Azure Reservations, users must commit to paying a given rate on compute resources, and more extended periods attract higher discounts. To use Azure Reservations, you must first evaluate the cloud capacity needed to run your workloads over a particular period.  In addition to the 72% discount, Azure lets users combine this model with the hybrid plan to save up to 80% compared to on-demand rates.

Azure Reserved Instances Plans

The following table compares various discounts on Azure services. See your savings compared with the pay-as-you-go model:

ResourceUse Case3-Year Commitment
Linux Virtual MachinesUsed for workloads based on Linux operating systemUp to 72% off
Windows Virtual MachinesUsed for running workloads on Windows OS.Up to 80% off
Azure SQL DatabaseUsed for managing database systems such as user accounts backing up and upgrading databases.Up to 80% off
Azure Cosmos DBThis is a highly responsive way of managing a NoSQL database at low latency and high speed.Up to 65% off
Azure StorageAzure Storage is a way of storing data, objects, applications, files, and other resources in the cloud.Up to 37% off
Azure App ServiceIt securely hosts mobile and web applications made in various programming languages.Up to 55% off

Always check that a particular service qualifies for Azure Reservations before making a long-term commitment

Using Azure Reserved Instances to Reduce Cloud Spend

Here are five ways of using RIs to optimize cloud costs.

Use Reservation Recommendations

Azure recommends optimizing cloud costs with Azure Reservations. Microsoft Azure has excellent visibility over your cloud infrastructure. Azure can explore your usage patterns over a seven to 60 day period through visibility tools. Once Azure has your data, it simulates future costs and calculates the best way to save on costs in the long term. You can also find other ways of saving costs on the Azure portal, including chargebacks, coupons, and special discounts. These recommendations apply only to resources that qualify at that particular hour.

Save With Azure Hybrid

Azure users can save up to 80% by combining Reserved Instances with the Hybrid Benefit function, and this benefit applies to Linux users who want to transfer their on-premise subscriptions to Microsoft Cloud. Cloud engineers can now migrate RHEL (Red Hat Enterprise Linux) Linux servers, SLES (SuSE Linux Enterprise Server) servers, and other resources to Azure at great discounts.

Azure Hybrid functionalities can help you lower the daily costs of maintaining images. According to Azure, users can convert an existing pay-as-you-go subscription to a Reserved Instances billing model.

Pay in Milestones

Even though users sign up for a one to three year commitment, Microsoft lets users make monthly and yearly payments. The unit cost per month does not change. This payment flexibility gives enough time for estimating resources needed over a long period. As a result, you can terminate old subscriptions and take on new RI plans based on an accurate forecast. Reserved pricing remains consistent provided that users do not exceed allocated resources.

Choose the Right Virtual Machine

Azure users can save big by allocating the right resources. Paying for what you use lets you get the best out of cloud resources. The Azure Pricing Calculator can help you estimate the costs of using different resources on the Azure cloud.

In addition, the pricing calculator gives variations in prices for the On-Demand, Spot, and Reserved pricing. The calculator computes the savings for one-year and three-year commitments. With Azure, you’ll have the flexibility to scale up resources when the need arises.

Common Promotions

You can get discounts on RIs by attending Microsoft developer events and conferences. You could also become a Microsoft Partner. This helps in utilizing season-specific discounts available for active customers. If you choose to be a Microsoft Partner, you may get cheaper certifications on Azure Cloud, which will equip you with more information on saving with RIs.

However, the best way of optimizing cloud costs is a preventive approach, which involves terminating zombie assets and unused resources. You can also right-size your Virtual Machines, so you don’t pay for more than you need.

Bottom Line

Azure Reserved Instances helps cloud users obtain significant savings if they choose a long-term commitment. Azure also eliminates the high upfront fee by giving flexible options for RIs. If you can accurately predict the resources needed on your workload over time, then the Reserved-pricing model is for you.

If you are looking to cut your Azure spending, nOps can be your ultimate tool. nOps provides actionable insights for Reserved Instances (RI) planning to help cloud users save money.

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