A Guide to Finally Understanding Azure VM Pricing

Adam Listek

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Underpinning most cloud services are virtual machines. One of the first offerings, for any service, virtual machines power countless services. What can be difficult to understand is effective ways to understanding pricing. Azure has become a popular cloud service provider with a multitude of options. Understanding Azure VM pricing can be difficult, and in this article, we demystify how to optimize value!

Azure Payment Options

Azure Payment options are broken into three different types depending on a customer’s Azure VM needs. Specific payment options offer discounts but come with trade-offs. The trade-offs may make those options unattractive for your server environment. Depending on your particular account and situation, there are ways to use Azure VMs for free.

Pay as you go

The simplest form of cloud VM pricing. Pay as you go, means that for every second a VM resource is active you are billed. Considered the most flexible option, pay as you go is perfect for short-lived workloads, or instances that can not be interrupted.

Reserved Virtual Machine Instances

To reduce the cost of a VM by up to 72%, you can reserve a virtual machine instance for one to three years in a specific region. Reserved instances can be easily exchanged or returned. If you need to cancel a reserved instance, you can; with an early termination fee, up to the yearly limit. Additionally, you can apply a reserved instance to other VM sizes within the same group and region.

Spot Pricing

On any given day there may be a lot of unused capacity in the Azure cloud. To better take advantage of that, Azure Spot Virtual Machines (Spot VMs) can access unused Azure compute capacity at up to a 90% discount. Spot VMs can, and will, be evicted when the current price is higher than an initially agreed-upon maximum price. Spot VMs will also be evicted when Azure no longer has available compute capacity. This option is perfect for testing, ephemeral workloads, and those that can be quickly resumed.

Azure Hybrid Benefit

If your organization already has existing on-premise workloads that you intend to move to Azure VMs, you can use your Windows licenses to pay a reduced rate. Migrating your Windows Server, SQL Server 2008 or 2008 R2 workloads to Azure, will add three additional years of security updates for free.

Dev/Test Pricing

For development and testing purposes, there are the dev/test Azure options. Included are discounts and monthly credits, but are subject to those users that maintain an active Visual Studio subscription.

Common Azure VM Features & Categories

All current-generation virtual machines include the following features at no additional cost.

  • Load Balancing
  • Auto-Scaling
  • Free dynamic virtual IP (VIP)

Azure Virtual Machines are broken up into several categories that offer different performance- focused features.

  • General Purpose – Balanced CPU-to-memory offering.
  • Compute Optimized – High CPU-to-memory offering.
  • Memory Optimized – High memory-to-CPI offering. These VMs start at 16GBs with a variety of processors.
  • Storage Optimized – High disk throughput and IO.
  • GPU – Single or multiple GPU support virtual machines.
  • High Performance Compute – Optimized high performance CPU machines with optional high-throughput network interfaces.

Deciphering Naming

When you are looking at the pricing and models, it can be helpful to understand exactly how the system names are defined. The formula below is what Microsoft uses to name the different instances available.

{Family} + {Sub-Family (Optional)} + {# of vCPUs} + {Additive Features} + {Accelerator Type (Optional)} + {Version}

Family

There are a number of families that correspond to the different options, broken down by the different categories previously listed.

Sub-Family

Currently, the sub-family is specific to the GPU capable specialized VMs but may be used for different system types in the future.

Additive Features

  • a – AMD based processor
  • d – Local temp disk is present
  • h – Hibernation capable
  • i – Isolated size, dedicated to a single tenant (customer)
  • l – Low memory
  • m – Memory intensive, which is the maximum amount available for a particular size
  • t – Tiny memory amount, which is the smallest amount available for a particular size
  • r – RDMA, high throughput network interface
  • s – Premium storage capable including the possible use of Ultra SSD

Accelerator Types

Much like sub-family, accelerator types correspond to the type of hardware used in the specialized GPU SKUs. This may include non-GPU specific SKUs in the future as new options become available.

How Azure VM Billing Works

There are a few questions that are often asked regarding billing. VM’s are billed per second but charged for the number of full minutes your virtual machine is running. As an example, 5 minutes and 30 seconds would be billed for only 5 minutes. Per the example, billing is rounded down to the lowest minute.

It is also important to know that when you have stopped a virtual machine, you may still be billed for that machine until the machine is deallocated. The prices shown online do not include tax in their estimates.

Also to keep in mind is that this all references local disks that do not persist data when a VM is stopped. Persistent Managed disks are an add-on cost and billed separately. To recap, let’s go over what is important to keep in mind with Azure VM pricing.

  • VM’s are billed per second but charged for the lowest full minute
  • Only deallocated machines are not charged
  • Tax is not included in the pricing estimates
  • Persistent Managed disk storage is not included, only temporary local disks

Windows Server Azure VM Pricing

Server prices change often and any prices listed would quickly be out of date. The best way to understand how to maximize your investment is to look at what you need for a given system and see what pricing options match the best. Windows has additional license costs built into the Azure VM pricing. If you already have Windows licenses from on-premise systems being migrated to Azure cloud, the Hybrid Server Benefit will be very beneficial.

  1. Decide on the type of VM – Do you need memory, CPU, storage or performance-optimized VMs?
  2. Decide on the Region – Different regions will cost more than others.
  3. Decide on Payment Option
    1. Azure Hybrid Benefit
      1. Pay as you go – Most expensive, but most flexible
      2. 1 year reserved – Average around ~40% savings, but locked in for 1 year
      3. 3 year reserved – Average around ~60% savings, but locked in for 3 years
      4. Spot Instances – Average around ~80% savings, but least reliable as VMs can be evicted at any time
    2. Standard Pricing
      1. Pay as you go – Most expensive, but most flexible
      2. 1 year reserved – Average around ~20% savings, but locked in for 1 year
      3. 3 year reserved – Average around ~30% savings, but locked in for 3 years
      4. Spot Instances – Average around ~70% savings, but least reliable as VMs can be evicted at any time

Linux Server Azure VM Pricing

Unlike Windows, Linux does not have the same license costs except for certain OS flavors. For example, SUSE Linux Enterprise offers 24×7 support for a premium VM price.

  1. Decide on the type of VM – Do you need memory, CPU, storage or performance-optimized VMs?
    1. Additionally, Linux has many different flavors of the operating system and different options may provide cost savings.
  2. Decide on the Region – Different regions will cost more than others.
  3. Decide on Payment Option
    1. Pay as you go – Most expensive, but most flexible
    2. 1 year reserved – Average around ~40% savings, but locked in for 1 year
    3. 3 year reserved – Average around ~60% savings, but locked in for 3 years
    4. Spot Instances – Average around ~80% savings, but least reliable as VMs can be evicted at any time

Additional Azure VM Options

Additionally, you can purchase a few extra options for a given VM. These options are not necessary, but for ease of management and when troubleshooting, they may be prudent to consider purchasing.

  • IP Address – The dynamic IP that is subject to change, may not be viable in your environment. Therefore additional options exist.
    • Instance-level public IP address – An additional IP address that can be directly assigned to a VM.
    • Reserved IP addresses – Static IP address directly assigned to a VM.
    • Load-balanced IP address – Additional IP address assigned to an Azure Cloud Service containing one or more Azure virtual machines.
  • Support – Basic plan is included for all customers at no additional cost and the following plans offer escalating features based on price and needs.
    • Developer – $29 per month
    • Standard – $100 per month
    • Professional Direct – $1,000 per month

Conclusion

There are many options with Azure VM pricing and a variety of VM types, features, and add-ons that are available. Depending on your needs, you can create price savings by smart consideration of pricing options. Considering Reserved Instances, Spot Instances or Azure Hybrid Benefits will net you large savings over time. Mapping your environment and VM needs to Azure VM pricing will help you to find the perfect combination!

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