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Interested in saving up to 80% on your Azure VM hosting costs?

13 Sep 2018

Jason NormantonHere are two major, but little-known, benefits within Microsoft's Azure platform which could help to significantly minimise your VM (Virtual Machine) hosting costs:

In this post I’m going to focus on:

• Microsoft Azure Reserved Instances (RI's)

• Azure Hybrid Benefit (AHB)

Together, they could help you achieve savings as high as 50- 80%. (Compared to pay-as-you-go Azure VM pricing).


Discover how our experts can help you make your journey to the Cloud more efficient and more effective.

What are Reserved Instances?

  • Reserved Instances (RIs) are VM types which can be paid for in advance for a set period. Either 1 or 3 years. It’s worth noting 3-year reservations offer greater discount levels than 1-year reservations.
  • Reserved Instances are available for all VM families For UK, US and over 25 other Azure regions

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Copyright:Microsoft

Are there any restrictions on RI's?

Some. For example, they are NOT available for:

• A-series, A_v2 series or G-series

• Azure government clouds

• Certain geographic regions, for example Germany.

How does it work in practice?

You can "reserve" an RI by making an upfront 12 or 36-month commitment to Microsoft through an Enterprise Agreement (EA) or through a Cloud Service Provider (CSP) such as OCSL (A CANCOM Company).

  • The entire 1 or 3-year licence cost is paid upfront at the time of purchase.
  • Once purchased the RI is aligned to a subscription or an account in Azure
  • As soon as a VM matching the RI type is deployed, the RI countdown is initiated, and your previous pay-as-you-go pricing is suspended.

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Copyright: Microsoft

What if I change my mind?

If this happens on Azure or a Particular VM type, you can "cash in" the RI and you will be refunded the remaining RI credit minus a 12% handling fee.

Good Reasons to purchase a Reserved Instance for Microsoft Azure
  1. RI's are the best way to significantly reduce hosting costs in Azure
  2. RI savings can be up to 72 per cent compared to pay-as-you-go prices – with 1-year or 3-year terms on Windows and Linux virtual machines (VMs).
  3. When you combine savings gained from Azure RIs with the added value of the Azure Hybrid Benefit, see below, you can save up to 80 per cent*.
  4. RIs are not available for classic VMs, so a compelling reason for customers with "Classic Deployments" to look to migrate to resource manager deployments.

What is the Azure Hybrid Benefit (AHB)?

Azure Hybrid Benefit allows an organisation with on-premises Windows Server licences (which have Active Software Assurance on them) to save Azure hosting costs if they allocate those licences to Virtual Machines running in Azure.

For each Windows Server licence allocated to an Azure VM, Microsoft will remove the cost of the OS (on up to two virtual machines!). Leaving you to just pay for the base compute costs.

Combining these 2 benefits can deliver up to 80% savings when compared to pay-as-you-go Azure pricing*

Interested in finding out more about Reserved Instances for Microsoft Azure or Azure Hybrid Benefits?

Jason Normanton

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Jason Normanton

Enterprise Architect

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