Octobits Blog – The cloud has become the backbone of many modern businesses thanks to its promise of scalability and flexibility. Learn more everyhting you need to know about Microsoft Azure pricing models through our guide. Starting from overview, additional options, factors affecting, and how to optimize the cost.
But as any seasoned entrepreneur will tell you, the cloud’s pay-as-you-go model can be a double-edged sword.
It’s great that you can scale up your resources whenever you need to, but if you don’t keep an eye on those costs, they can quickly spiral out of control.
In this situation, the different Microsoft Azure pricing models present both opportunities and challenges for Australian companies looking to get the most out of their cloud investments.
That’s why we’re going to take a look at the pricing models for Microsoft Azure.
Overview of Azure Pricing Models
Pay-As-You-Go
The Pay-As-You-Go (PAYG) model is a key part of Azure’s pricing structure. PAYG gives users flexibility by charging them based on how much they use.
This model has been a popular choice for many years. In the second edition of “Fundamentals of Azure,” we can observe how PAYG has become one of the most enduring payment systems.
This model is great for startups and small businesses because it means you don’t have to make a big upfront investment.
PAYG lets businesses scale their cloud usage up or down depending on what they need, which is great for fluctuating workloads.
However, this model can be tricky in a multitenant environment, especially when it comes to accurately measuring and billing consumption across different tenants.
The operational complexity and potential for unpredictable costs mean businesses need to keep a close eye on their usage to avoid getting a nasty surprise on the bill.
Reserved Instances
Reserved Instances (RIs) are a great way to cut costs for predictable workloads by committing to a one- or three-year term.
You can save up to 72% compared to PAYG pricing by locking in resources at a lower rate.
This model is great for companies with a steady and predictable workload, as it offers both cost savings and budget predictability.
The downside is that it’s less flexible, as businesses are tied to specific resources and configurations, which may not adapt well to changes in workload or business requirements.
Spot Instances
Spot Instances are a great way for businesses to save money. They let you bid on unused Azure capacity at a lower price.
This model is really cost-effective for non-critical workloads that can cope with the odd interruption.
Spot Instances can be up to 90% cheaper than PAYG prices, making them a great choice for batch processing jobs or development environments.
The downside is that you might get a last-minute cancellation, which means you need to plan ahead and manage your jobs carefully to avoid any problems.
It’s worth noting that there are other payment types available outside of Azure, in addition to the three we’ve already discussed.
For your info, you can take a look at the paper “Pricing Schemes in Cloud Computing: An Overview.”
Additional Pricing Options
Azure Hybrid Benefit
The Azure Hybrid Benefit is there to help businesses get the most out of their existing on-premises licences by using them with Azure services.
This option can save you up to 85% on cloud costs compared to standard PAYG rates when you combine it with other Azure savings plans.
This is a great option for businesses moving from on-premises to cloud environments. It’s a cost-effective way to move your workloads without spending a fortune on new licences.
Azure Dev/Test Pricing
Azure Dev/Test Pricing gives businesses a discount on development and testing environments.
This way you can innovate and build without the full cost of production environments getting in the way.
This pricing model is perfect for organisations that need a few non-production environments for development, testing, and training.
The lower costs mean companies can experiment and refine their solutions before going live, which helps them to innovate while keeping their spending in check.
For reference on Azure SQL, you can check “Microsoft Azure SQL Database Pricing: Models, Tiers, & Cost Optimization Strategies.”
Azure Savings Plan for Compute
The Azure Savings Plan for Compute is a flexible option that lets businesses lock in a fixed hourly spend on compute resources for one or three years, in exchange for discounted rates.
This plan can save you up to 65% compared to PAYG pricing.
This model is great for businesses with variable compute needs, as it lets you save money without having to commit to specific instances like you would with Reserved Instances.
However, as with other commitment-based models, it’s important to be careful when forecasting future usage to avoid overcommitting or underutilising resources.
Factors Affecting Microsoft Azure Pricing Models
The cost of using Azure isn’t a simple, fixed number. One of the most impactful factors is the pricing model you choose for your Azure services.
As an example, Pay-As-You-Go offers flexibility but can lead to higher costs if your usage isn’t carefully monitored.
On the other hand, Reserved Instances can provide substantial discounts, but they require a commitment that might not be suitable for businesses with unpredictable workloads.
Your service usage patterns also play a significant role. Unexpected spikes in usage can lead to unexpected spikes in your bill.
If you’re running data-intensive applications, the cost of data transfer and storage can also add up.
The geographical location of your Azure resources also matters. Azure’s pricing varies across different regions, so choosing a region with lower costs can be a smart move.
If you’re running a multitenant solution, the tenancy model you choose can also affect your costs.
Sharing resources among multiple tenants can lead to cost savings, but it also introduces complexities in managing and measuring usage.
Factors like tenant isolation and storage growth need to be carefully considered to ensure profitability.
Then, the service level agreements (SLAs) and performance requirements you need to meet can influence your costs.
Higher SLAs or demanding performance needs often translate to more robust and expensive infrastructure.
For reference on Azure VMs, you can check “Microsoft Azure VPS Pricing: Models, Factors Affecting, & Cost Optimization“
Cost Optimisation Strategies
Microsoft Azure pricing model elasticity is a double-edged sword. It’s fantastic for scaling resources on demand, but without a watchful eye, those costs can add up faster than you’d like.
Thankfully, you can use a range of strategies to help you keep your cloud expenditure in check.
One of the most popular strategies is to use Reserved Instances. Think of it like a season pass for your favourite Azure services.
You commit to using them for one or three years, and in return, you get a hefty discount – up to 72% off the pay-as-you-go price. This is a great option if your workloads are steady and predictable.
Another essential strategy is right-sizing your resources.
Therefore, continuously monitor your resource usage and adjust your virtual machines and other services to match the actual demand.
For those non-critical workloads that can handle a bit of downtime, spot instances are a fantastic way to save.
They offer up to a whopping 90% discount compared to regular virtual machine prices.
Autoscaling is another tool in your cost-optimization arsenal. It automatically adjusts the number of running instances based on demand.
For businesses looking to take their cost management to the next level, FinOps is the way to go.
It’s all about bringing financial accountability into the cloud conversation.
Azure offers tools like Cost Management with Copilot and Azure Advisor to help you implement FinOps practices.
Azure Operational Optimisation Strategies
Beyond those cost standard strategies, consider using a tool like Octobits. It’s a one-stop shop for managing your software license, including Azure.
With Octobits, you get a clear, centralised view of your billing, resource usage, and even device management, all in one easy-to-use dashboard.
Let’s say you’re a growing startup in Australia, juggling multiple Azure services.
Octobits can help you consolidate all your billing information, identify any underutilised virtual machines, and even pinpoint redundant subscriptions.
Armed with these insights, you can make informed decisions to right-size your resources and optimise your Azure costs.
But, Octobits isn’t just about saving money; it’s about making your cloud environment work smarter for you.
It helps you reduce complexity, improve oversight, and ultimately get the most value from your Azure investment.
We know this might sound too good to be true. So, it’s your time to get down to business with the homework.
We encourage you to do your research and see how Octobits can help you take control of your cloud costs.
Kindly visit the Octobits website to learn more or book a demo to see it in action.
Or, are you ready for coffee and croissants? Let’s get to know each other better. We will show you how we can help you navigate the pricing landscape with ease.
In Closing
It is crucial for businesses aiming to optimise cloud spending to understand Azure pricing models. Assess your workload needs, usage habits and budget limits to choose a pricing strategy that aligns with your goals.
Azure’s flexibility means you can adjust spending to fit your specific requirements.
That’s why you will find the Octobits support system helpful in creating thoughtful plans and actively managing your resources.
No matter the size of your project, Octobits can assist you in making well-informed decisions about Microsoft Azure pricing models that align with your needs and goals.
