Understanding Azure Savings Plans for Compute
Saving money is a core objective for everyone, whether that is in your grocery shopping or your cloud spend.
There are lots of tools and best practices that can be used to help you with costing and sizing your resources within the Azure cloud.
In this post, I want to concentrate on the Azure savings plans for compute, released in October. I will cover the Azure savings plan for compute, why it’s an important tool that can help you save money, and explain any gotchas when using it.
What is Azure savings plans for compute?
In October 2022, Microsoft launched the Azure savings plans for compute. These savings plans offer a flexible pricing plan that could save up to 65% from the pay-as-you-go prices.
With Azure savings plans for compute, you commit to spending a fixed amount on compute services for one or three years.
If you are a Microsoft Customer Agreement (MCA) or Cloud Solution Provider (CSP) customer, you will see the prices for savings plans in US Dollars. Those on Enterprise Agreements (EA) will see the plans in their local currency.
You can pay for the savings plan monthly or pay for it all upfront.
What services are covered by Azure savings plans for compute?
The Azure savings plans for compute include compute service in any Azure region. That means you can use a savings plan to get a discount on the following:
- Azure Virtual Machines
- Azure Dedicated Hosts
- Azure Container Instances
- Azure Functions premium plan
- Azure App Service
Some things are not included in the savings plans.
With virtual machines(VM) bare-metal infrastructure, A, G and GS series are excluded.
Savings plans are only applied to Azure Functions Premium Plans.
And they are only relevant to Premium v3 and Isolated v2 Azure App Services.
Why are Azure savings plans for compute important?
Azure Reserved Instances (RI) are another created to help save money within your environment, but they can be pretty rigid as they are scoped to an Azure region and the type of service or VM size.
With Azure savings plans for compute, the scope is bigger. You purchase a savings plan that can be used for any relevant compute service within any region.
The cost savings with Reserved Instances is greater than savings plans for compute, but its flexibility can often balance out that cost savings.
Savings Plan scope
When purchasing a savings plan, one important consideration is the scope, which can significantly impact how benefits are applied:
- Resource Group Scope: You can purchase a savings plan that only covers resources within a resource group.
- Subscription Scope: A savings plan that has a subscription scope would only be applied to resources within that one subscription.
- Management Group Scope: All the resources under this management group will be subject to the savings plan.
- Shared Scope: If you are an Enterprise Agreement (EA) or Microsoft Customer Agreement (MCA) customer when you select the shared scope option, anything under that billing profile will be eligible for the savings. For EA or MCA customers, the shared scope can include multiple Microsoft Entra tenants within the enrollment, meaning that all subscriptions under the same billing profile are covered, even if they span multiple tenants.
Gotchas when using Azure savings plans for compute
Something to be aware of: you can’t cancel or get a refund on any savings plans. Also, when the savings plan is applied to Windows virtual machines and SQL databases, the savings plan discount doesn’t apply to the operating system or software costs.
Conclusion
Azure savings plans for compute can be integral to your cost savings initiatives. Combined with Azure Reserved Instances and following Azure Advisor cost reductions you can significantly reduce costs.