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A lot of companies struggle to optimize their cloud costs, regardless of the platform they use. Whether it is AWS, Microsoft Azure, or Google Cloud businesses are looking for new ways of optimization which might be very different by the way. Some may need to cut costs, others to shift their points of prioritization, and third to invest more to boost their ROI. 

As a DevOps services provider, we often have a request from businesses to optimize their development cycle with Azure cost reduction. 

So, in today’s blog, we will share our experience on Azure cost management best practices.

Factors Affecting Azure Costs

Here are the main factors that affect Azure cost optimization.

Pricing Models

Azure claims to be up to five times less expensive than AWS. It offers different pricing models so that businesses can pick up the one that is the most effective in their unique case. Here are some of them:

  1. Pay-As-You-Go - With this model, you pay for the Azure services you use on an hourly or per-minute basis. This is a flexible and scalable option suitable for variable workloads.
  2. Reserved Instances - This model involves making a commitment to a one- or three-year term for a specific virtual machine size in exchange for a significant discount. It is suitable for predictable and steady workloads.
  3. Spot Instances - Azure Spot VMs allow you to take advantage of unused capacity at a lower cost. However, they can be preempted if the capacity is needed elsewhere, making them suitable for fault-tolerant and flexible workloads.
  4. Azure Hybrid Benefit - This model allows you to bring your existing Windows Server and SQL Server licenses to Azure, providing cost savings for organizations with on-premises investments.
  5. Azure Dev/Test Pricing - Designed for development and testing scenarios, this pricing model provides discounted rates for virtual machines to support these non-production workloads.
  6. Free Tier - Azure offers a free tier with limited resources, providing an opportunity for users to explore and try out various Azure services without incurring charges.

Understanding these models helps organizations lower Azure costs based on their specific workloads and usage patterns. You can also use a calculator to estimate the approximate cost of using any combination of Azure products.

Resource Type

Azure offers a diverse range of resources, each with its associated costs. These resources can include computing resources (VMs), storage, networking components, databases, and more.


Azure provides a wide array of services, each with its pricing model. For example, Azure SQL Database has a different pricing structure than Azure Functions. Choosing services that align with specific use cases and performance requirements is essential for Azure cloud cost optimization.


Azure has data centers located worldwide, and costs can vary based on the chosen region. Organizations should consider such factors as energy costs, local regulations, and demand influence regional pricing when deciding where to deploy resources to reduce Azure costs.

When is it Important to Reduce Your Azure Costs? 

Since Azure is a cloud platform, businesses can scale up or down when needed. Azure cost optimization involves aligning actual resource utilization with optimal usage. To enhance efficiency and cost management, organizations can adhere to the following Azure cost optimization best practices.

Azure Cost Optimization: 13 Best Practices For Cloud Cost Management

Best Practices for Azure Cost Optimization

#1 Move Workloads to Containers

Transitioning to containers can significantly optimize Azure costs. 

Cloud-native technologies, such as microservices and containers, can create cost monitoring blind spots due to their complexity. If your applications currently run on virtual machines, migrating to containers can save on cloud hosting expenses by minimizing resource wastage on virtualization overhead. 

For instance, in a workload with 12 servers running on separate Azure VMs, deploying servers as containers via Azure Kubernetes Service enables consolidation into 3-4 VMs, resulting in substantial Azure cost savings. AKS pricing per host server aligns with standard Azure VM pricing, offering potential savings of up to 75% on hosting costs. 

Containers, being more lightweight than VMs, allow running multiple containerized applications on a single host, thereby optimizing resource utilization. However, it's crucial to consult with Azure experts before making changes, as transitioning to containers can sometimes increase costs. To ensure optimal costs, aim for 100% VM utilization, monitored with Azure Monitor, and utilize auto-scaling features for dynamic resource adjustments.

#2 Use Storage Tiering

Azure cloud cost optimization through storage tiering is a strategic pricing approach based on the frequency of data access and modifications. 

Azure Blob Storage offers Hot, Cool, and Archive storage tiers with varying redundancy options, allowing flexibility in cost management. By moving less-sensitive or infrequently accessed data to lower-cost tiers or reducing redundancy, substantial savings can be achieved. 

Configuring automated processes for moving old data to cost-effective storage options also enhances efficiency. The automation of storage tiering in applications ensures that less frequently accessed data is automatically shifted to lower-cost tiers, contributing to ongoing cost savings.

#3 Move to Elastic Databases

With elastic databases, you can achieve high performance and achieve significant cost optimization in Azure.

Running SQL Server or other databases on Azure VMs can lead to underutilization and increased expenses. Migrating to Azure SQL services, particularly SQL elastic pools, offers substantial cost reductions by paying only for actual database resources used. 

Elastic pools efficiently share resources across multiple databases, automatically pause inactive databases and resume when necessary, aligning expenses with actual usage patterns, enhancing scalability and cost-effectiveness. 

Leveraging serverless Azure SQL further optimizes costs by automatically scaling computing power based on workload demands, allowing precise billing for actual usage. 

#4 Tag Azure Resources

Azure provides the flexibility to tag resources in production using key-value pairs, allowing for easy identification and tracking. For instance, tags like "Environment = Production" help categorize resources and appear in Azure utilization and cost reports. 

While tagging can be perceived as labor-intensive, it significantly enhances cost visibility and management. In tandem, Azure Resource Groups serve as containers for related resources, aiding in resource organization. Creating well-structured Resource Groups facilitates understanding the distribution of costs across solutions. Combining Resource Groups, types, regions, and tags in the Azure Portal provides insights into cost allocation. 

Additionally, establishing a resource tagging strategy is a best practice, enabling the identification of cloud resources and facilitating cost tracking and Azure cost optimization. Tags can be used to identify resource creators, organizational cost centers, or specific use cases, allowing administrators to efficiently manage and optimize costs by identifying and shutting down specific workloads when needed.

#5 Remove Unused Virtual Disks

In Azure, virtual disks remain even after deleting a virtual machine, contributing to ongoing costs. For Azure cost savings, identifying and deleting unused virtual disks is crucial. The Azure portal's Disks screen displays all active managed virtual disks in the current storage account. An empty "Owner" field indicates a disk not associated with any VM and can potentially be deleted. 

Additionally, unmanaged disks can be found in the Disks (classic) screen and, if not attached to any VM, should be deleted through script execution. 

#6 Right-Size Your VMs

There is a variety of Virtual Machines with diverse hardware and performance capabilities, offering options to optimize both performance and cost. To find the most suitable VM for your workload, experiment with different options and choose the one that provides the best throughput and performance at the lowest cost. 

Once identified, stick with the optimal VM and implement auto-scaling to dynamically adjust the number of VMs based on actual workloads. It's essential to strive for optimal cost by aiming for close to 100% VM utilization. Regularly monitor metrics using Azure Monitor, and leverage auto-scaling or other methods to add or remove machines to maintain high utilization levels. This approach ensures efficient resource utilization while keeping costs in check.

#7 Choose the Best Payment Option 

Azure provides different payment options tailored to varying business needs. The Pay-as-you-go model offers maximum flexibility, enabling on-demand infrastructure additions, although it can be relatively more expensive. 

Reserved instances, requiring an upfront commitment of 1-3 years, offer potential cost savings of up to 70%, making them suitable for long-term workloads. 

Spot instances leverage Azure's unused compute capacity, resulting in significant cost savings, potentially up to 90%. While spot instances may be suspended at any time, they are ideal for projects without strict time constraints. 

These payment options cater to different preferences, allowing businesses to choose the most suitable approach based on their specific requirements and budget considerations.

Built-in Azure Features to Reduce Costs

Azure also provides several tools for Azure cloud optimization. These include:

Built-in Azure Features to Reduce Costs

#8 Azure Pricing Calculator

Companies can utilize the Azure Pricing Calculator to gain insights into the costs associated with migrating workloads to the Azure cloud. This tool offers estimates of Azure pricing tailored to various configurations and sizes of Azure Virtual Machines, factoring in considerations such as memory, CPU, location, storage, and usage hours. 

#9 Azure Cost Analysis

Azure Cost Management provides essential tools and capabilities for robust cost Analysis on the Azure platform. Here are the functionality it offers:

  • Viewing forecast costs;
  • Viewing forecast costs grouped by service;
  • Viewing forecast costs for a service;
  • Viewing Azure and AWS costs together;
  • Viewing New Commerce license and consumption costs;
  • Viewing cost breakdown by Azure service;
  • Reviewing invoiced charges in cost analysis;
  • Viewing cost breakdown by Azure resources;
  • Viewing cost breakdown by selected dimensions;
  • Viewing cost by day or by month;
  • Viewing your spot VM charges;
  • Viewing your reservation charges;
  • Viewing costs for specific tag;
  • Viewing enrollment monthly cost by term;
  • Viewing EA enrollment accumulated costs.
Azure Cost Analysis

#10 Azure Budgets

Budgets in cost management play a crucial role in planning and fostering organizational accountability. They enable proactive communication of spending information, facilitating effective cost management and ongoing monitoring of expenditure trends. 

Through configuring alerts based on actual or forecasted costs, you can ensure adherence to organizational spending limits. These notifications are triggered when budget thresholds are exceeded, but they do not impact resources or halt consumption. 

Budgets serve as a valuable tool for comparing and tracking spending, aiding in the comprehensive analysis of costs. Evaluations against cost and usage data occur every 24 hours, with email notifications typically dispatched within an hour of meeting a budget threshold. 

#11 Azure Advisor

Azure Advisor is a personalized cloud consultant that evaluates resource settings, usage metrics, logs, and traces to provide recommendations for optimizing cost savings, performance, reliability, and security. 

The tool's dashboard delivers customized suggestions across all subscriptions, allowing users to filter recommendations by subscription and resource type. Advisor offers proactive and actionable best practice recommendations, facilitating the implementation of specific cost optimization strategies in Azure.

Azure Advisor

#12 Azure Cost Alerts

When utilizing Azure resources, cost alerts are automatically generated, consolidating all active cost management and billing alerts in a centralized view. Cost Management generates alerts when your consumption exceeds specified thresholds. There are three primary types of cost alerts include budget alerts, credit alerts, and department spending quota alerts.

Azure Cost Alerts

#13 Azure Resource Manager

Azure Resource Manager offers a management layer for creating, updating, and deleting resources within your Azure account. Post-deployment, you can utilize management features such as access control, locks, and tags to secure and organize resources. 

With Resource Manager, businesses are able to manage infrastructure through declarative templates, deploy, manage, and monitor resources as a group, ensure consistent redeployment throughout the development lifecycle, define resource dependencies for proper order, integrate Azure role-based access control, and apply tags to logically organize and view costs for groups of resources sharing the same tag in your subscription.

Azure Resource Manager

How Can inVerita Help to Optimize Your Azure Costs?

Cloud costs take a large part of IT budgets. This guide offers valuable insights and practical advice to help you minimize your Azure spending while optimizing your usage. Implementing these recommendations can empower you to make informed decisions, ensuring a more cost-effective and efficient utilization of the Azure resources tailored to your specific needs.

The inVerita DevOps team ensures your successful transformation into the cloud, connecting development, production, testing, delivery, and operations into a single and sturdy workflow. Feel free to contact us to discuss what are Azure cost management best practices in your particular case.
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