Understanding Azure Costs and 4 Ways to Reduce Them

By Srikanth
8 Min Read
Window Azure

Apparently, the primary reason many companies are moving to the cloud is to reduce operational costs. However, they often find it surprising when they start using cloud resources and the cost starts piling up. While they might still be enjoying the benefits of operating in the cloud, they are also aware of cloud resources taking a large chunk of their budget.

Azure is a cloud service or platform developed by Microsoft, and it is one of the major cloud solutions that pile up costs. However, with proper planning and implementation of basic FinOps principles, an individual or organization can significantly reduce Azure costs. Do you want to learn more about this? Brace up as this article provides detailed knowledge on optimizing Azure cloud costs.

What Are Azure Cloud Costs?

Before learning about Azure cost optimization best practices, it is very important to know the meaning of Azure cloud costs. Azure is basically a public cloud platform that Microsoft created to provide a lot of services for individuals and organizations, ranging from storage to analytics services.

There are many services to choose from, and many organizations spend thousands and millions of dollars annually to buy some of these services. While the services this cloud platform offers are great, the costs can soon take over a large chunk of an organization’s balance sheet if it isn’t optimized. Below, we will look at factors that often affect Azure cloud costs.

What Affects Azure Cloud Costs?

  • The Type of Service

The type of service an individual or organization is getting at the Azure cloud platform can also affect the amount of money they have to pay. Between the Enterprise, Cloud Solution Provider (CSP), and Web Direct subscriptions Azure offers, these services have different billing rates and dates. Also, the billing structures for Azure services depend on whether it is a native or third-party service on the cloud platform.

  • The Type of Resources

There are many resources on the Azure platform, and each comes at different costs, and the cost calculation for each resource might be very different. The thing is, each resource on the Azure cloud platform comes with different cost calculation methods. The number of meters attached to a resource varies greatly.

Hence, assuming an organization is using resources with many meters tracking movements, they are bound to pile up enormous cloud costs. A solution to this usually uses automated and advanced cloud optimization solutions such as Globaldots to get an in-depth analysis of each resource.

  • Pricing Models For Clients

As a client for an Azure cloud resource or service, the pricing model one chooses can determine if one will spend too much on that particular service. For instance, assuming an organization needs a particular cloud resource for about 3 months and chooses a minimum pricing model of 1 year, they will waste about 9 months paying for an unused resource. Below, we will discuss some major pricing models Azure employs for most cloud resources and services.

  • Azure Hybrid Benefit

This pricing model on the Azure platform allows clients to get free discounts on Windows resources whenever they use existing on-premise Microsoft deployments. This is a form of bring-your-own-license (BYOL) model, and it can help a business save a lot of money while using Azure.

  • Azure Reserved Instances

Azure-reserved instances are one of the ways an organization can save a large amount of money so long as they will use a resource or service for several years. For instance, assuming an organization plans to use a storage resource for 2 to 3 years, they can get discounts for this service up to 70% when they pay for all those years.

  • Pay-per-use  Model of Pricing

This is the most expensive pricing model for Azure resources, and organizations use it without knowing about it. The only positive about this pricing model is that it is flexible and easily adapts according to market demands. Apparently, it is primarily useful if an organization wants to use the service for a short period, like a month. However, it is recommended that a business involve cloud cost optimization solutions such as Globaldots for better planning and choice of pricing models.

How to Reduce Azure Cloud Costs

  • Provide Visibility to Azure Costs

There’s no way an individual or an organization can reduce what they don’t know about. Hence, it is very important to provide visibility on all the Azure cloud costs using the platform’s billing information and cloud optimization tools. When there’s visibility, a business or company can actually know where to start in reducing them.

  • Implement a Tiered Storage System

A tiered storage system means choosing a storage service that is tailored to fit a specific product an organization is working on. A good instance is that the Azure Blob Storage model offers Premium, Hot, Cool, and Archive storage tiers, and an organization can choose depending on what they want to do.

  • Right Size Resources and Services

Now, an organization might have known how much they spend in the cloud; they will now determine or point out those services they aren’t using. For instance, they might pay for reserved instances when they only need the resources for a month or two. In other scenarios, they might also be paying for a resource meant for a 50,000-employee company when they have only 5,000.

  • Remove Unused Virtual Disks

Another crucial way of ensuring the reduction of Azure cloud costs is by removing virtual disks that an organization isn’t using anymore. When you delete a virtual disk you are not using, Azure won’t automatically do so and will continue piling up the costs.


Using Azure means an organization is opening up an opportunity to enjoy many benefits of operating in the cloud. However, many companies unknowingly pile up costs while using Azure services, and it often comes as a shock when they find out.

The good news is that, above, you will find a comprehensive guide to how organizations incur Azure cloud costs. Furthermore, you get to know a step-by-step process of optimizing these costs while improving performance.

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