When working with Azure, it’s essential to understand the many factors that influence your costs — and how you can manage or reduce them. Let’s explore what drives Azure pricing and the strategies that can help you save money.
Resource Types and Services
Some Azure resources are inherently more expensive than others.
- Storage: Prices vary based on the type of storage, performance tier (e.g., standard or premium), and access tier (e.g., hot, cool, archive).
- Databases: You may not need the full power of an Azure SQL Managed Instance — a more economical Azure SQL Database might suffice.
- Compute: Consider whether your workload needs Azure Dedicated Hosts, or whether Virtual Machines (VMs) or Azure Virtual Desktop will be more cost-effective.
Azure Regions and Traffic
Azure datacenter regions are not all priced the same.
- Region Choice: Differences in electricity, cooling, and labour costs mean prices vary by location.
- Ingress & Egress Traffic:
- Ingress (data coming into Azure) is often free.
- Egress (data leaving Azure) is charged by zone:
- Zone 1 – US, Canada, Western Europe, Australia Central
- Zone 2 – India, Korea, Japan, Australia East
- Zone 3 – Brazil, South Africa, UAE
- Germany – DE Zone 1 (distinct due to data residency laws)
- Be careful: Choosing a cheaper region may lead to higher data transfer costs if your customers or services are far away.
Storage Backups
- Keeping backups across multiple availability zones or regions is more resilient but incurs extra storage costs.
Licensing and Savings Options
Azure provides many ways to save — if you plan ahead.
- Hybrid Use Benefit: If you have existing Windows Server or SQL Server licenses with Software Assurance, you can reuse them in Azure and save up to 80% when combined with reserved instances.
- Spot VMs: For non-critical or interruptible workloads, spot pricing lets you set a max price and can save up to 90% — but these don’t have full SLAs.
- Reserved Instances: Commit to using a VM for 1–3 years, and you can save up to 72%.
- Reserved Capacity: Similar discounts for Azure SQL Databases and Azure Synapse Analytics — 33–65% savings.
- Enterprise Agreements (EA): Large organizations (500+ users/devices) can lock in discounted pricing over 3 years. Going over your commitment? You’re still charged at EA rates.
Delete Unused Resources
A simple and effective way to reduce your Azure bill is to identify and delete resources you’re no longer using — especially VMs, disks, public IPs, and storage accounts left running accidentally.
Related Topics
- Topic 38: Azure Role-Based Access Control (RBAC)
- Topic 37: Microsoft Entra Conditional Access
- Topic 31: Azure Pricing and Total Cost of Ownership (TCO) Calculators
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