How to – Reduce your Azure IaaS Costs

A regular starting point for most people when first using Azure, or any public cloud, is a virtual machine. Depending on your environment, VMs can be one of the most expensive resources. It’s no surprise that this can be a strong negative when considering a move to cloud.

Before anything is deployed, it’s important that you are aware of the tools that Microsoft make available to help you estimate your costs in advance. This can help both understand and avoid unwanted surprises with your bill.

First up is the Azure Pricing Calculator, with a bit of work, you can achieve an acceptably accurate cost estimate for an environment. I normally choose the default settings when it comes to pricing options (such as PAYG) as it gives me the most expensive and therefore safest estimate for a quick quote. If you have access to other consumption offers, ensure you are signed in so you can access their rates.

For this post I’m going to use a single VM estimate to display cost and changes. As it’s a single VM I have chosen a beast – M128m

Once you have your worst case estimate, it’s time to start making some adjustments to get that price down as low as possible. To do this, I recommend the following three options.

  1. Reserved Instances
  2. Automation
  3. Hybrid Benefit

First up, and most straight forward – Reserved Instances. They are a billing object that allows you to save money over a fixed period of time by paying for the usage up-front. From the screen grab you can see the savings can be approx. 64% for a three-year reserved instance. I have an old post that is still valid on RIs over here.

Again, you will pay the entire price up front, but look at the difference it makes to the monthly rate for our beast:

Next, modifying your usage hours using Automation. Now, this doesn’t have to be using Azure Automation and its Start/Stop solution as there are alternative like over on Azure MVP, Gregor Suttie’s blog. Whatever method you choose, update your usage hours in the cost calculator to see your savings, for this post I’m going to first remove weekends (average 8 days a month = 192 hours) and cut the remaining workdays in half (538/2). So instead of 730 hours, we get 269 hours and the appropriate reduction in price to our beast:

One thing to note at this point, if you’re using Reserved Instances, there is no point in using Automation to save on costs. RIs cover the full usage for the period.

Finally, the simplest to implement but arguably most complex option, Azure Hybrid Benefit. This is a licensing option that allows you to reuse your on-prem licenses in Azure. This is an option that can only be used in Azure and therefore a unique cost saving method. Applying it is simply a tickbox within your VM blade. Microsoft have a calculator to help you work out the licensing side of things, I’d recommend leaning on your LSP for this part as it can be a bit complicated and you need to make sure you’re compliant. You can see the savings below for our beast:

You’re probably already thinking it, can I layer these together and save even more? Absolutely.

Check out the reduction to the price of the beast if we apply AHB and a three year RI:

So what are you waiting for, head over to your Azure tenant and start saving some money on those VMs ASAP. As always, if there are any questions, get in touch!

Understanding Azure Reserved Virtual Machine Instances

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.

RIexample

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.

VM name VM group Ratios

Standard_D2s_v3

DSv3 Series

1

Standard_D4s_v3

DSv3 Series

2

Standard_D8s_v3

DSv3 Series

4

Standard_D16s_v3

DSv3 Series

8

Standard_D32s_v3

DSv3 Series

16

Standard_D64s_v3

DSv3 Series

32

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