Reducing your Azure bill: top techniques for managing costs

For current Azure customers seeking to reduce costs, we have compiled a list of practical tips in this article on achieving more with fewer resources when running your workloads in Azure, utilizing the available free tools and plans. As you start to evaluate your workloads for potential cost savings in Azure, it’s important to note that the cloud model is pay-as-you-go, with charges linked to computing, storage, and software licensing fees. However, there are several powerful cost-saving techniques that can be employed to minimize expenses associated with these factors.

Right-size resources

One of the easiest ways to cut costs is by choosing the right size for your Azure resources. Many Azure resources, such as virtual machines and databases, come in different sizes and performance levels. By selecting the proper size, you can ensure that you are not paying for resources that are larger than what you need.

Azure Advisor

Having a clear understanding of your resource consumption for specific workloads is crucial. This not only helps you avoid unnecessary expenses incurred from underutilized resources but also enables you to take advantage of commitment-based pricing plans that offer significant discounts for a specified amount of spending in Azure.

To gain visibility into your resource consumption, we highly recommend using Azure Advisor as a starting point. This tool is readily available and free to operate within the Azure Portal, providing an automated assessment of your Azure tenant with customized recommendations across various areas. By following these tailored recommendations, you can save up to 65% compared to pay-as-you-go prices on various computing services.

Microsoft Cost Management

Azure Cost Management is a tool that helps you monitor and optimize your Azure spending. It provides detailed reports and insights into your spending patterns, as well as recommendations for cost optimization. Setting up a cost category alert is highly recommended as it allows Azure Advisor to notify you of any new potential cost-saving actions promptly. It’s worth noting that this service is available for free.

Azure Hybrid Benefit

We highly recommend taking advantage of the Azure Hybrid Benefit when provisioning your virtual machines. By doing so, you can reuse your existing and future Windows Server or SQL Server software licenses, resulting in savings of up to 40% or more. This can help you reduce the cost of running virtual machines or databases in Azure. Furthermore, Azure provides unlimited virtualization rights for Windows Server, allowing you to run it on Azure Dedicated Host or Azure Stack HCI. This can help you further optimize your costs and get the most out of your licensing investments.

Storage types

Matching your storage requirements to the appropriate storage type can result in significant cost savings. With Azure, you have several storage choices and different access tiers available for blob storage. The “hot” tier provides instant access, while the “cool” tier is suitable for less frequently accessed data. Additionally, there is an “archive” tier available for infrequently accessed data. While hot storage is traditionally the most expensive option, there’s now a new alternative that can offer quick wins. Previously, having a larger disk storage capacity typically translated to higher performance potential. However, cost avoidance strategies such as managing consumption costs, utilizing license portability, leveraging Azure Hybrid Benefit, and committing to a savings plan can help you optimize your expenses.

Saving plans and reserved instances

Both Savings Plans and Reserved Instances offer discounts based on your level of commitment to Azure. With Savings Plans for computing, users can enjoy more flexibility as they can switch to pay-as-you-go pricing when their resource consumption exceeds the average committed consumption, which can change over time.

In contrast, Reserved Instances are ideal for stable and predictable workloads, offering a more significant discount of up to 80% on compute costs for the appropriate workload. While Reserved Instances may not be as flexible as Savings Plans, they offer substantial cost savings when used for the right workloads. Azure provides an option to reserve compute capacity for one or three years, which can significantly discount the cost of virtual machines.
The great news is that you can combine Reserved Instances and Azure Savings Plans. This means that the Savings Plan can cover any computing resources not covered by Reserved Instances, allowing for maximum cost savings.

Automation

Implementing automation is one of the most effective ways to minimize costs in the first place. Azure offers several automation runbooks, and one of the most popular ones is to start and stop VMs on a schedule. This is especially useful for DevTest VMs, where all virtual machines with a DevTest tag can be automatically shut down after working hours, saving unnecessary compute costs.

Another area where automation can be highly beneficial is in managing desktop virtualization. Azure Virtual Desktop, for instance, offers a built-in depth-first load balancing algorithm that provisions new hosts only when existing hosts reach their utilization limit. You can avoid over-provisioning resources and achieve significant cost savings by automating load balancing and auto-scaling. Azure VM Scale Sets can be a game-changer in this regard.

Predictive autoscale

Auto-scaling allows you to automatically adjust the number of resources you’re using based on demand. By using auto-scaling, you can ensure that you are only paying for the resources you need at any given time.

Azure VM Scale Sets are an excellent tool for managing a group of load-balanced virtual machines (VMs) effortlessly. By automatically balancing the number of VM instances, they adjust to changes in demand or a pre-defined schedule.

Virtual Machine Scale Sets have recently added new features that provide more precise predictions for scaling-out computing and help reduce costs. One such capability is predictive autoscale, which uses machine learning to anticipate when autoscaling is required. By analyzing trends in data from the past seven days or more, it adds new instances precisely when needed, making it ideal for workloads with periodic spikes. Users can configure how far in advance new instances should be provisioned up to one hour before the predicted workload spike.

Predictive autoscale can also be used to forecast load-balancing needs, providing valuable insights without triggering a scaling action.

Flexible orchestration is a significant advancement for VM Scale Sets, allowing users to directly configure the percentage allocation for standard VMs and Spot VMs at any given time. This mix is applied during scale-out, allowing users to take advantage of the best pricing in Azure when additional computing is required.

Spot VMs

Spot VMs are an excellent choice for workloads that can tolerate interruptions, such as batch processing jobs. These VMs enable you to make the most of Azure’s available capacity at reduced prices. When Azure requires that capacity, it will terminate the Spot VMs, but you gain considerable cost savings in exchange.

Tags

Both cost management and automation actions rely on tags. Tags can be assigned to various levels, such as subscriptions, resource groups, and specific resources. Although you can add tags to existing subscriptions and resources, implementing policies that ensure they are tagged during deployment is the most efficient approach.

In conclusion, by right-sizing resources, leveraging tools such as Azure Advisor and Azure Cost Management, taking advantage of Azure Hybrid Benefit, selecting appropriate storage types, and using automation and predictive autoscaling, current Azure customers can optimize their workload and save on costs. With these practical tips, users can achieve more with fewer resources while running their workloads in Azure.

If you feel like maintaining your cloud could be more affordable – contact us for a consultation, our expert team will be glad to help. Or if you’re still hesitating if cloud migration is the right choice, discover our case study about how we’ve decreased infrastructure costs for our client by up to 10 times.