Reduce Azure cost using Reserved Instances

Reduce Azure cost using Reserved Instances

Azure Reserved Instances can be used to save cost between 22% – 36% for one year or three year commitment and for Windows VMs when combined with Hybrid Use Benefits (HUB) then the savings go up to ~70%. Azure Reserved Instances are highly recommended for large enterprises, high configuration Virtual Machines and for workloads that are expected to remain active for more than a year.

Hybrid Use Benefits – is the option provided by Azure during Windows VM creation only to leverage your Enterprise Agreement or Software assurance licenses on Azure to get license benefits. Is is given that once this option is selected enterprise needs to keep track of Windows OS deployed, its Client Access Licenses (CALs) & report to Microsoft in their next true-up cycle.

Points to note on Azure Reserved Instances –

  1. Person who is creating this requires Owner level permission on the Subscription
  2. Save up to 80% if combined with
  3. Reserved Instances can be used for regular VMs, VM scale sets and Batch services (user subscription mode)
  4. Reserved Instances apply to a specific VM type such D2 and gets applied to any VM but you can’t select a specific VM to apply the Reserved Instance
  5. Reserved Instances are available for 1 yea and 3 year up front payment option. It also offers exchange and cancellation options
  6. Reserved Instance does not cover additional storage charges
  7. Reserved Instance can also be combined with Azure Hybrid Use Benefits to avail more discount

Faqs are here –


Best Practices

  1. If your VMs span is less than few months such as with Development, Acceptance environments then preferably don’t use Reserved Instances
  2. Use different VM types for non-Prod and Production VMs so that you could apply Reserved Instances only for Production VMs
  3. Try best to leverage Azure Hybrid Use Benefits to make use of existing enterprise agreement with Microsoft

How to configure Azure Reserved Instances

Login to Azure Portal – , go to All Services, search for Reservations.

Let us see comparison of costs between Regular VM with combined with Azure Hybrid Use Benefits & Azure Reserved Instances

VM Type Regular Cost Azure RI – 3 years Azure RI + HUB
D1 (1 core, 3.5G RAM) 86 Euros / month 49 Euros / month (43% savings) 20 Euros / month (76% savings)
D15 (20 core, 140G RAM) 1624 Euros / month 1031 Euros / month (36% savings) 461 Euros / month (71% savings)

It is clearly evident that Azure Reserved Instances bring in lot of value when combined with other benefits to the organization.

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