Who says that Azure hosting has to be expensive? 💰

More companies are looking at deploying services to cloud based platforms like Azure, but it might be cheaper than you think

Who says that Azure hosting has to be expensive? 💰

Given the impact of COVID-19, Italik is having more discussions with companies about migrating on-premises workloads to Azure. As part of this, there are usually two common questions that arise, which are:

  1. Data Locality; most UK based organisations would like to ensure that data remains within the UK
  2. Running Costs; most organisation see the ongoing running costs of Azure Virtual Machines as a blocker to most migrations

For this blog post, I am going to be focusing on the running costs aspect and the ways that you can save money on Azure Virtual Machine hosting.

The Microsoft Azure list price of a Virtual Machine is based on a PAYG basis, and there is nothing to stop anyone from creating an Azure subscription and then paying for any workloads using a Credit Card. There isn't anything wrong with doing this, but if you have a Virtual Machine, like a Domain Controller for example that needs to be on 24x7x365, then there are other options available that can save you (a lot!) of money.

Let me start by showing you this image (you will see this image a lot if you research Azure Reserved Instances):

Azure Reserved Instances ⚡

Azure Reserved Instances are a way of reducing Azure costs by committing to a one or three year term for a Virtual Machine. This means that you commit to purchasing the compute cost upfront of a Virtual Machine rather than paying monthly. The disadvantage of doing it this way is that if you decide that Azure isn't right for that workload, then you still have to pay for the Reserved Instance. Still, the benefit that you get is that Microsoft will offer a discount of up to ~72% over the list price of a Virtual Machine.

Example 💡

Let's take the example of a Domain Controller; you plan on running a Domain Controller as a Virtual Machine in Azure, and you want to run it with the following configuration:

  • Region: UK South
  • Instance: B2MS (2 vCPUs, 8GB RAM)
  • Managed Disk: P10, 128GB (Premium SSD)

The PAYG price for that configuration of Virtual Machine is approximately £73.27 per month. But if you decide to use Reserved Instances over three years, then that drops to £41.46 per month, which is about a ~65% discount that Microsoft offers. The amount of discount that Microsoft offer depends on the Virtual Machine instance and it does vary, but the average discount is approximately 72% (some Virtual Machine instances for example offer up to 82% discount over three years!).

If you want to have a play around with the figures, I would highly recommend that you go and take a look at the Azure calculator:

Pricing calculator | Microsoft Azure
Configure and estimate the costs for Azure products and features for your specific scenarios.

From there, you can see how much money you can save if you are interested in looking at Reserved Instances:

Reserved Instances are not just available for Virtual Machines... 🤔

You might be surprised to learn that Reserved Instances are available for other Azure services as well, such as:

  • Azure Storage reserved capacity; but there is a catch to this in that the minimum reserved capacity is 1PB!
  • Azure Cosmos DB reserved capacity; only covers throughput provisioned for the resources
  • SQL Database reserved vCore; only covers the compute costs
  • Azure Synapse Analytics; only covers cDWU usage
  • Azure Databricks - only covers DBU usage
  • App Service stamp fee; only covers stamp usage
  • Azure Database for MySQL; only covers the compute costs
  • Azure Database for PostgreSQL; only covers the compute costs
  • Azure Database for MariaDB; only covers the compute costs
  • Azure Data Explorer; only covers the markup charges
  • Azure Cache for Redis; only covers the compute costs
  • Azure Dedicated Host; only covers the compute costs
  • Azure Disk Storage reservations; only covers premium SSDs of size P30 (1TB) or greater

But wait there is more; Azure Hybrid Benefit 🎉

Not a lot of people know that they can utilise existing Software Assurance licenses in Azure for no additional cost. This is called Azure Hybrid Benefit, and it is perfect for those companies that have Software Assurance and want to run additional workloads in Azure. If you own any Windows Server Standard or Datacentre Edition licenses with active Software Assurance, you can convert or re-use these licenses to run Windows Server virtual machines in Azure and pay a lower base compute rate (Linux virtual machine rates).

But Azure Hybrid Benefit also extends out to SQL Server, so again, if you have any SQL Software Assurance licenses, you will be entitled to use these licenses to be able to run SQL workloads in Azure. The compute costs will still apply, but SQL Software Assurance will cover the licensing element.

The amount that you can save on the licensing aspect does depend on the virtual machine instance that you want to cover and it doesn't necessarily follow the number of virtual CPUs assigned to the virtual machine either. For example, a DS4 v2 which has 8 vCPUs and 28GB RAM, the OS license cost is £257.89/month whereas a D8 v3 which has 8 vCPUs and 32GB RAM, the OS license cost is £200.22. Now there probably is a method to the costing, but what that is I am not 100% sure.

Example 💡

The best way of showing the potential cost savings is to use the Azure calculator:

There is also a separate Azure Hybrid Benefit calculator so that you can calculate how many virtual machine instances and SQL Databases you are entitled to:

Azure Hybrid Benefit – hybrid cloud | Microsoft Azure
Save up to 40 per cent on Windows Server virtual machines using your existing licences and Software Assurance, and get all the benefits of cloud computing.

Summary 🥇

To summarise this post, I would highly recommend to anyone that has or is thinking about running workloads on Azure to think about Reserved Instances. Azure Reserved Instances are handy for those "always-on" workloads and can save a significant amount of money. If you can combine Reserved Instances with Hybrid Benefit, there is a considerable amount of money to be saved.

And, if you have any questions get in contact with us via our website - we would love to help.