The consumption-based model is a key feature of cloud computing that allows organizations to only pay for the services they use. This model helps optimize costs and ensures businesses can scale resources up or down as needed without incurring unnecessary expenses.
Pay-as-You-Go Pricing
Cloud services operate on a pay-as-you-go basis, meaning that businesses are charged based on actual usage rather than upfront costs. This approach is beneficial for companies that need flexible, scalable solutions without long-term commitments.
Service-Specific Pricing Models
Different cloud services follow unique pricing structures based on their usage patterns:
- Storage Services: Typically billed based on the amount of storage provisioned, often measured in megabytes (MB), gigabytes (GB), or terabytes (TB).
- Compute Services: Virtual machines and serverless computing solutions can be scaled in processor power and memory, with corresponding variations in cost.
- Networking Services: Charges are often based on data transfer and bandwidth usage.
For more on cloud pricing structures, see our AZ-900 on article on Compare cloud pricing models.
Cost Reduction Through Service Pausing
One of the key advantages of the consumption-based model is the ability to pause certain services when they are not in use. Many cloud providers, including Azure, allow businesses to automate service pausing to minimize costs. This is particularly useful for:
- Virtual machines that are only needed during business hours.
- Development and testing environments that do not require 24/7 availability.
- Scheduled workloads that run periodically.
Prepaying for Azure Reservations
Although the consumption-based model provides flexibility, organizations can further optimize costs through Azure reservations. By committing to a one-year or three-year reservation, customers can receive substantial discounts:
- Discounts of up to 72% on reserved compute resources.
- Potential savings of up to 80% when combining reservations with Azure Hybrid Benefit.
Conclusion
The consumption-based model is a powerful pricing strategy that helps businesses reduce costs, scale dynamically, and only pay for the resources they need. By leveraging service pausing and reservation discounts, organizations can optimize their cloud spending while maintaining flexibility.
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