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Sep 12, 2023
Reducing and controlling costs – Azure Cost Planning and Management

Reducing and controlling costs

The following are some of the ways we can reduce and control costs:

  • Optimize resources: This is an operational activity. Its purpose is to identify any resources that are not used and can be deleted, any resources that can be right-sized onto more cost-optimal resource types or sizes, and identifying any resources that don’t need to be running 24/7 and that could be shut down or paused to avoid costs. Any resources running on IaaS should be evaluated to see whether they can be moved to PaaS, serverless, or SaaS. Azure Advisor is an essential tool for this activity; tags should also be used to identify costs owners.
  • Azure hybrid benefit: This is a licensing benefit and allows an organization to maximize any investment in existing on-premises Software Assurance (SA)-enabled Windows Server or SQL licenses (or eligible subscription-based licenses); this removes the need to license and pay with the Pay as You Go (PAYG) model. For a VM, this does not discount or remove the compute costs or any storage or networking costs; you are still liable for those and need to factor this into the total operating costs of a VM.
  • Azure reservations: This is a resource benefit and acts as a billing discount mechanism to reduce PAYG consumption charges. It does this by allowing you to commit to paying for an amount of capacity for a fixed term at a discounted rate than you would pay for on the PAYG consumption rate. Reservations are available for a range of resources, such as VMs; they make the most sense and are best used where the workloads must run for long periods or 24/7, where costs are usually reduced by shutting down the VMs to save costs and this is no longer possible. For a VM, this does not apply a discount, remove the software license costs, or any storage or networking costs; you are still liable for those and need to factor this into the total operating costs of a VM.
  • Spot pricing: This is a resource benefit and allows an organization to make considerable savings based on the ability to take advantage of unused capacity. This is best used for workloads that don’t need a specific period in which they must run. This could be tested/dev, analytics, machine learning, batch processes, rendering, and so on.

In this section, we looked at how to reduce and control costs. In the next section, we will look at Azure Cost Management.

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Sep 12, 2023
Factors that affect costs – Azure Cost Planning and Management

Factors that affect costs

Each Azure consumption (usage)-based service has one or more usage meters that define the price rate and unit of cost. Depending on the service, there will be different units of costs.

Billing is performed monthly for each subscription based on resource consumption that’s collected from individual meters for that subscription. This means that every month, you may receive a different invoice based on a different set of costs incurred; maybe you consumed more on one resources meter, less on another, and created new resources that created costs against another meter.

The following are primary factors that can affect costs:

  • Purchasing model: The costs for resources may differ, depending on your purchase model. You can either purchase your Azure directly from Microsoft or through a Cloud Solution Provider (CSP): https://azure.microsoft.com/pricing/purchase-options.
  • Resource type: The costs are specific to your resources; each resource has a billing meter and cost unit. For example, data storage and data transfer will have a unit of billing of GB/month, a VM or Azure SQL database will have a unit of billing of 1 hour, and a premium SSD managed disk will have a unit of billing of 1/month. Storage accounts can charge for any read and write operations unless you’re using Premium, in which case these charges are not applicable. It is important to understand the billing units for each resource you create.
  • Location: The costs will vary between Azure regions.
  • Usage period: Some resources, such as VMs, can be shut down (de-allocated) to prevent running costs; two identical VMs running for different running hours will have different costs. You would continue to pay for storage costs, but you wouldn’t pay for data transfer costs while the VM is not passing network traffic. It is also worth noting that services such as Azure AD Domain Services, Azure Bastion, and the Azure VPN gateway service, once created, will still be billed even if they are not used; the only way to prevent costs for these services is to delete them.
  • Network traffic: Ingress data transfer (data entering or incoming) for an Azure Region or between resources within the same region is always free, but egress data transfer (data leaving or outgoing) from a region is billed at a per-GB unit; this is irrespective of the fact that this is internet traffic or that the region is using a VPN or ExpressRoute circuit.

Note that some resource types are free and have no billing meter or cost implications. The following are some examples of resources that can be created or enabled with no costs. Likewise, removing any of these will not reduce your costs or the invoice you receive:

  • User accounts or groups
  • Resource groups
  • Virtual networks
  • Virtual network peering
  • Network interfaces
  • Network security groups
  • Availability sets

It is important to understand what resources have cost implications and what resources don’t. In this section, we looked at factors that affect costs. In the next section, we’ll look at how to reduce costs.

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