Unlock Cost Efficiency with Azure Reservations

Azure reservations can help you save up to 72% on costs compared to pay-as-you-go pricing, making them a great option for businesses looking to optimize their cloud spend.

You can reserve capacity for popular Azure services like virtual machines, storage, and databases, which helps you lock in prices for a one- or three-year term.

By committing to a set amount of usage upfront, you can avoid the uncertainty of variable costs and better plan your budget.

Azure reservations can be applied to resources in any region, making them a flexible solution for businesses with global operations.

Azure Reservations are a pricing plan that can help you reduce cloud costs by up to 72% when you commit to using Azure offerings for a duration of one or three years.

You can purchase reservations for Azure products, but not for third-party products. The discount is applied upon billing and does not affect the runtime state of any Azure resources.

Azure lets you pay for reservations either upfront or on a monthly basis, with the total cost remaining the same for both options.

To be eligible for the maximum discount, you need to commit to using a specific instance type, size, and region for your virtual machine (VM) instances.

Azure Reserved VM Instances are specifically designed for Windows and Linux virtual machines (VMs) and can be used in conjunction with Microsoft's Azure Hybrid Benefit offering to increase the discount to 80%.

Here are some key benefits of using Azure Reservations:

Azure Reservations offer a great way to get more value from your cloud investments, delivering significant cost savings and other benefits.

You can save up to 72% on your virtual machines, databases, and cloud storage solutions by using Reservations, while maintaining the same performance level.

Combining Azure Reservations with the Azure Hybrid Benefit can provide even more savings, letting you bring your Windows or SQL Server licenses into the Microsoft Azure platform without additional software costs.

Using Azure Reservations can also provide price predictability, allowing you to lock in your hourly usage costs for one or three years and forecast more accurately.

This predictability can help minimize budget strain and make it easier to plan for your cloud expenses.

Here are some tools you can use to get recommendations about the potential benefits of Azure Reservations:

By using these tools and purchasing Azure Reservations, you can enjoy the benefits of efficiency and predictability, including the ability to apply them to other resources and features to cancel or renew your Reservations.

Azure Reserved Instance discounts are applied to resource usage based on the options selected when purchasing the reservation. Unused reservation time cannot be carried over, and the quantity reserved for an hour is lost if there is no matching resource within that hour.

You have three options to set the reservation scope: Single Resource Group, Single Subscription Scope, and Shared Scope. The Shared Scope option lets you apply reservation discounts to matching resources used by multiple eligible subscriptions connected to the same billing scope.

Worth a look: Reserved Instances Azure

Here are the reservation scope options in more detail:

Azure Reservations provide flexibility to help meet your evolving needs, allowing you to exchange a reservation for another reservation of the same type or refund a reservation up to $50,000 USD in a 12-month rolling window if you no longer need it.

Buying a reservation can be a smart financial move if you have consistent resource usage that supports reservations.

You'll get the option to reduce your costs by switching from pay-as-you-go rates to a reservation discount.

The pay-as-you-go rates can add up quickly, especially if you're running instances of a service continuously.

Discounts are applied to resource usage based on the options selected when purchasing the reservation.

The system automatically tries to apply the reservation discount to another resource that matches the scope, even after shutting down the resource. However, if the system cannot locate a resource that matches the scope, the reservation remains unused.

Reservation scopes are flexible and can be changed after buying the reservation. You can choose to make the scope "shared" to apply a reservation discount across all account subscriptions.

Here's a breakdown of the three scoping options:

Once you set up auto renewal, the system will automatically purchase a replacement reservation once an existing one expires.

You don't need to do anything to be able to manage reservations by default, it's automatically given to certain users.

The person who buys a reservation and the account administrator of the billing subscription used to buy the reservation are added to the reservation order.

Enterprise Agreement and Microsoft Customer Agreement billing administrators can also view and manage reservations by default.

Here's a breakdown of the default entitlement:

Note that these users can view and manage reservations, but others may not have access by default.

Purchasing a reservation in Azure is a straightforward process. You can do it by selecting All Services > Reservations in the Azure Portal, then clicking Add to purchase a new reservation. The Purchase reservations pane will be displayed, allowing you to select the product you want to purchase reservations for.

Azure recommends products and quantities that maximize cost savings, so be sure to take advantage of those suggestions. It may take up to one day for your reservation to be applied after the purchase.

If you're a billing administrator, you can view and manage all reservations and reservation transactions by signing in to the Azure portal and navigating to Cost Management + Billing > Products + services > Reservations. This will show you the complete list of reservations for your EA enrollment or billing profile.

Here are the steps to view and manage reservations as a billing administrator:

Note that you can't change the billing subscription after a reservation is purchased, but you can use the exchange process to set the right billing subscription for the reservation.

To purchase a reservation in Azure, you'll need to navigate to the Reservations section in the Azure Portal. Select All Services > Reservations to get started.

From there, you can purchase a new reservation by selecting Add from the top menu bar. This will display the Purchase reservations pane.

You can choose the product you want to purchase reservations for, and Azure will recommend products and quantities that maximize cost savings.

To view and manage existing reservations, head back to the Reservations section in the Azure Portal. It's a good idea to check this regularly to ensure your reservations are up to date.

It may take up to one day for your reservation to be applied after the purchase.

When using Virtual Machines, you'll need to pay for software separately, as it's not included in the Reservation. This can be done by taking advantage of Azure Hybrid benefits.

Compute costs are covered by the Reservation, but you'll still need to budget for networking and storage costs.

For example, if you're using a Virtual Machine, you'll have to pay for the software that runs in that machine, even if it's covered by the Reservation.

You can maximize cloud savings on Azure with intelligent planning, procurement, utilization, and lifecycle management for Azure RIs using tools like Eco from Spot by NetApp.

Regular monitoring is crucial to avoid overprovisioning RIs and losing unused discount provisions after each month.

To optimize Reservation usage, utilize cost-monitoring tools to identify potential usage anomalies and look for new cost-saving opportunities.

Azure reservation savings only result from sustained resource use, so try to maximize your reservation to get as much use and savings possible.

You can apply filters to your usage data to determine relevant usage, such as filtering MeterCategory by Virtual Machines and using the ResourceLocation field to identify data center VMs.

Here are some key steps to optimize your reservation:

VM Setting Optimization is crucial to maximize Azure reservation savings. By default, instance size flexibility is on for reservations with a shared scope.

To update the optimize setting for a reservation, sign in to the Azure portal, select All Services > Reservations, select the reservation, and then select Settings > Configuration. Change the Optimize for setting to adjust the priority of your VM deployments.

Instance size flexibility applies the reservation discount to other VMs in the same VM size group, but data center capacity isn't prioritized for VM deployments by default. To prioritize data center capacity, you can change the scope of the reservation to single.

To optimize your reservation, make sure the virtual machines created by your organization match the VM size of the reservation. Ensure instance size flexibility is on by following the steps to change the optimize setting for the reservation.

You can also change the scope of the reservation to shared to apply it more broadly. This will help you get the most use and savings possible from your reservation.

Here are some scenarios to consider when optimizing your reservation:

Azure Reservations have a specific renewal process that's worth understanding. You get an email about a Reservation's expiration about a month beforehand.

If you want to manually renew a Reservation, you can do so in the Azure Portal. To access the renewal options, sign in to the Azure Portal and select All Services > Reservations. This will show you a list of Reservations to which you have access.

Select the Reservation you want to renew and choose Renewal. In this screen, you can Renew the Reservation. If you want to automatically renew the Reservation upon expiration, select Automatically purchase a new reservation upon expiry.

Deciding to opt out of Azure Reservations does not impact the actual resources, and your services continue to run normally.

Splitting a single reservation into two allows you to assign instances within that reservation to different subscriptions. This is useful when you've bought a reservation for multiple instances and want to change the scope for some instances to a different subscription.

You can split a reservation into two reservations through PowerShell, CLI, or through the API. This doesn't impact the reservation order, and there's no new commercial transaction with split.

To split a reservation, you need to get the reservation order ID and the details of the reservation. You can do this by running the following commands: Get-AzReservationOrder and Get-AzReservation.

Explore further: Azure Instances

Here's a step-by-step guide to splitting a reservation:

1. Get the reservation order ID by running Get-AzReservationOrder.

2. Get the details of the reservation by running Get-AzReservation.

3. Split the reservation into two and distribute the instances by running Split-AzReservation.

For example, you can split a reservation with 10 instances into two reservations with 3 and 7 instances, respectively, by running Split-AzReservation -Quantity 3,2.

If you expect changing demands in your business, it's essential to think about the potential change in business requirements when purchasing Azure Reservations.

Resource capacity can be sufficient now, but different capacity requirements might apply in the future. Azure Reservations has options to support changing demands, such as Azure Reserved Instances and vCore size flexibility for Azure Reserved Capacity.

Here are some options to consider:

These options allow you to purchase Reservations that can adapt to changing demands, ensuring you get the most out of your investment.

Azure Reservations are interchangeable, and you can exchange them at any time for a new Reservation of equal or lesser value.

You can exchange a Reservation to purchase another Reservation of a similar type in a different region, but exchanging Reservations of different types is impossible.

To exchange Reservations, sign in to the Azure Portal, select All Services > Reservations, select the Reservation you want to exchange, and click Exchange.

Exchanging Compute Reservations (Azure Reserved Virtual Machine Instances, Azure Dedicated Host reservations, and Azure App Services reservations) will no longer be supported for Reservations purchased after January 1st, 2024.

You can cancel a Reservation after purchase, but you'll receive a prorated refund for any unused portion of your Reservation.

The total value amount that can be canceled within a 12-month period is $50,000, and this applies to all cancellations made within the same billing scope.

To cancel a Reservation, sign in to the Azure Portal, select All Services > Reservations, go into the Reservation you want to cancel, and select Return.

You can also refund a Reservation, up to $50,000 USD in a 12-month rolling window, if you no longer need it.

Here are some key things to keep in mind when exchanging, canceling, and refunding Azure Reservations: