One of the main benefits of Azure’s billing model is that it offers per minute billing. This means that if you have an application/service/environment that isn’t required 24/7 you can reduce your costs by using Automation so that you will only pay for what you consume.

However, if your environment requires you run a VM constantly, the cost can start to mount up. To help alleviate this, Microsoft offer a solution in the form of long-term fixed price Virtual Machine instances.

These Reserved Instances (RI) help save money by allowing you to pre-pay for a one-year or three-year VM size. The fact that you pay up front, allows you to make significant savings on the Pay-As-You-Go pricing.

The most common subscription offers have the ability to purchase RIs, but there are some restrictions in terms of how it is approached. The options are the below:

• Enterprise agreement subscriptions. To purchase reservations in an enterprise enrollment, the enterprise administrator must enable reservation purchases in the EA portal.
• Pay-As-You-Go but you must have the “Owner” role on the subscription to buy a reservation.
• Cloud Solution Provider subscriptions. However, the providing partner must make the purchase on behalf of the customer.

Once purchased, the discount is then applied to the resource usage that matches up with the RI capacity purchased. For example, if you purchase a one-year RI for a DS4v3 size VM, and you are using a DS4v3 the discount will apply against that usage.

A good strategy is to determine the sizing before purchasing the RI. So my advice would be to run your VMs without an RI for a few months to ensure your sizing is suitable and therefore correct. However, if this is something that is proving difficult, there is a range of flexibility offered within your RI scope.

With instance size flexibility, you don’t have to deploy the exact same VM size to get the benefit of your purchased Azure Reserved Instances (RI) as other VM sizes within the same VM group also get the RI discount. As a rough example, see the below table from the Microsoft announcement.

This means that if you buy an RI for a D2sV3, it would cover half of an D4sV3 instance etc. More on how this can be applied and options available to you are here.

In general, I think an RI purchase is something that most deployments should be taking advantage of. Once sized correctly and with the ability to leverage flexibility, there are huge savings to be made with relatively low amounts of administrative effort.

More on how to buy an RI here

More on how the discount is applied here