Continuous cost optimization can take place at all stages of an Azure workload’s lifecycle, but your Azure subscription provides a very effective benefit to further optimize your investment when you are ready to deploy that workload.

For cloud workloads with consistent resource usage, you can buy reserved instances at a significant discount and reduce your workload costs by up to 72 percent compared to pay-as-you-go prices. Azure Reservations can be obtained by committing to one-year or three-year plans for virtual machines, Azure Blob storage or Azure Data Lake Storage Gen2, SQL Database compute capacity, Azure Cosmos DB throughput, and other Azure resources.

When you can predict and commit to needed capacity, it gives us visibility into your resource requirements in advance, allowing us to be more efficient in our operations. We can then pass the savings on to you. This benefit applies to both Windows and Linux virtual machines (VMs).

In addition, you now can combine the cost savings of reserved instances with the added Azure Hybrid Benefit when running on-premises and Azure workloads to save up to 80 percent over pay-as-you-go pricing.

How to get your reservation

A reservation discount only applies to resources associated with Enterprise Agreement, Microsoft Customer Agreement, Cloud Solution Provider (CSP), or subscriptions with pay-as-you-go rates. These are billing discounts (paid upfront or monthly) and do not affect the runtime state of your resources. And do not worry, you will not pay any extra fees when you choose to pay monthly.

To determine which reservation to purchase, analyze your usage data in the Azure portal, or use reservation recommendations available in Azure Advisor (VMs only), the Cost Manage Power BI app, or the Reservation Recommendations REST API.

Reservation purchase recommendations are calculated by analyzing your hourly usage data over the last seven, 30, and 60 days.

Simple and flexible

You can purchase Azure Reserved VM Instances in three easy steps—just specify your Azure region, virtual machine type, and term (one year or three years)—that's it.

Here is how it works: Discounts are generally applied to the resource usage matching the attributes you select when you buy the reservation. Attributes include the scope where the matching VMs, SQL databases, Azure Cosmos DB, or other resources run. Attributes include the SKU, regions (where applicable), and scope. Reservation scope selects where the reservation savings apply. You can scope a reservation to a subscription or resource group. When you scope the reservation to a resource group, reservation discounts apply only to the resource group—not the entire subscription.

You can manage reservations for Azure resources including updating the scope to apply reservations to a different subscription, changing who can manage the reservation, splitting a reservation into smaller parts, or changing instance size. Enhanced data for reservation costs and usage is available for Enterprise Agreement (EA) and Microsoft Customer Agreement (MCA) usage in Azure Cost Management and Billing. Those same customers can view amortized cost data for reservations and use that data to chargeback the monetary value for a subscription, resource group, or resource.

Capacity on demand

The ability for you to access compute capacity with service-level agreements, and ahead of actual VM deployments, is important to ensure the availability of mission-critical applications running on Azure. On-demand capacity reservations, now in preview, enable you to reserve compute capacity for one or more virtual machine size(s) in an Azure region or availability zone for any length of time. You can create and cancel an on-demand capacity reservation at any time, no commitment is required.

You also can 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, or cancel a reserved instance at any time and return the remaining months to Microsoft.

Learn more

Purchase reservations from the Azure portal, APIs, PowerShell, or CLI. Cloud solution providers can use the Azure portal or Partner Center to purchase Azure Reservations.

To dive deeper, check out the learning module, “Save money with Azure Reserved Instances.”