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Save costs with Azure Reserved VM Instances

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Applies to: ✔️ Linux VMs ✔️ Windows VMs ✔️ Flexible scale sets ✔️ Uniform scale sets

When you commit to an Azure reserved VM instance you can save money. The reservation discount is applied automatically to the number of running virtual machines that match the reservation scope and attributes. You don't need to assign a reservation to a virtual machine to get the discounts. A reserved instance purchase covers only the compute part of your VM usage. For Windows VMs, the usage meter is split into two separate meters. There's a compute meter, which is same as the Linux meter, and a Windows server license. The charges that you see when you make the purchase are only for the compute costs. Charges don't include Windows software costs. For more information about software costs, see Software costs not included with Azure Reserved VM Instances.

Determine the right VM size before you buy

Before you buy a reservation, you should determine the size of the VM that you need. The following sections will help you determine the right VM size.

Use reservation recommendations

You can use reservation recommendations to help determine the reservations you should purchase.

  • Purchase recommendations and recommended quantities are shown when you purchase a VM reserved instance in the Azure portal.
  • Azure Advisor provides purchase recommendations for individual subscriptions.
  • You can use the APIs to get purchase recommendations for both shared scope and single subscription scope. For more information, see Reserved instance purchase recommendation APIs for enterprise customers.
  • For Enterprise Agreement (EA) and Microsoft Customer Agreement (MCA) customers, purchase recommendations for shared and single subscription scopes are available with the Azure Consumption Insights Power BI content pack.

Services that get VM reservation discounts

Your VM reservations can apply to VM usage emitted from multiple services - not just for your VM deployments. Resources that get reservation discounts change depending on the instance size flexibility setting.

Instance size flexibility setting

The instance size flexibility setting determines which services get the reserved instance discounts.

Whether the setting is on or off, reservation discounts automatically apply to any matching VM usage when the ConsumedService is Microsoft.Compute. So, check your usage data for the ConsumedService value. Some examples include:

  • Virtual machines
  • Virtual machine scale sets
  • Container service
  • Azure Batch deployments (in user subscriptions mode)
  • Azure Kubernetes Service (AKS)
  • Service Fabric

When the setting is on, reservation discounts automatically apply to matching VM usage when the ConsumedService is any of the following items:

  • Microsoft.Compute
  • Microsoft.ClassicCompute
  • Microsoft.Batch
  • Microsoft.MachineLearningServices
  • Microsoft.Kusto

Check the ConsumedService value in your usage data to determine if the usage is eligible for reservation discounts.

For more information about instance size flexibility, see Virtual machine size flexibility with Reserved VM Instances.

Analyze your usage information

Analyze your usage information to help determine which reservations you should purchase. Usage data is available in the usage file and APIs. Use them together to determine which reservation to purchase. Check for VM instances that have high usage on daily basis to determine the quantity of reservations to purchase. Avoid the Meter subcategory and Product fields in usage data. They don't distinguish between VM sizes that use premium storage. If you use these fields to determine the VM size for reservation purchase, you may buy the wrong size. Then you won't get the reservation discount you expect. Instead, refer to the AdditionalInfo field in your usage file or usage API to determine the correct VM size.

Your usage file shows your charges by billing period and daily usage. For information about downloading your usage file, see View and download your Azure usage and charges. Then, by using the usage file information, you can determine what reservation to purchase.

Purchase restriction considerations

Reserved VM Instances are available for most VM sizes with some exceptions. Reservation discounts don't apply for the following VMs:

  • VM series - A-series, Av2-series, or G-series.

  • Preview or Promo VMs - Any VM-series or size that is in preview or uses promotional meter.

  • Insufficient quota - A reservation that is scoped to a single subscription must have vCPU quota available in the subscription for the new RI. For example, if the target subscription has a quota limit of 10 vCPUs for D-Series, then you can't buy a reservation for 11 Standard_D1 instances. The quota check for reservations includes the VMs already deployed in the subscription. For example, if the subscription has a quota of 10 vCPUs for D-Series and has two standard_D1 instances deployed, then you can buy a reservation for 10 standard_D1 instances in this subscription. You can create quote increase request to resolve this issue.

  • Capacity restrictions - In rare circumstances, Azure limits the purchase of new reservations for subset of VM sizes, because of low capacity in a region.

Buy a Reserved VM Instance

You can buy a reserved VM instance in the Azure portal. Pay for the reservation up front or with monthly payments. These requirements apply to buying a reserved VM instance:

  • To buy a reservation, you must have owner role or reservation purchaser role on an Azure subscription.
  • For EA subscriptions, the Add Reserved Instances option must be enabled in the EA portal. Or, if that setting is disabled, you must be an EA Admin for the subscription.
  • For the Cloud Solution Provider (CSP) program, only the admin agents or sales agents can buy reservations.

To buy an instance:

  1. Sign in to the Azure portal.
  2. Select All services > Reservations.
  3. Select Add to purchase a new reservation and then click Virtual machine.
  4. Enter required fields. Running VM instances that match the attributes you select qualify to get the reservation discount. The actual number of your VM instances that get the discount depend on the scope and quantity selected.

If you have an EA agreement, you can use the Add more option to quickly add additional instances. The option isn't available for other subscription types.

Field Description
Subscription The subscription used to pay for the reservation. The payment method on the subscription is charged the costs for the reservation. The subscription type must be an enterprise agreement (offer numbers: MS-AZR-0017P or MS-AZR-0148P) or Microsoft Customer Agreement or an individual subscription with pay-as-you-go rates (offer numbers: MS-AZR-0003P or MS-AZR-0023P). The charges are deducted from the Azure Prepayment (previously called monetary commitment) balance, if available, or charged as overage. For a subscription with pay-as-you-go rates, the charges are billed to the credit card or invoice payment method on the subscription.
Scope The reservation's scope can cover one subscription or multiple subscriptions (shared scope). If you select:
  • Single resource group scope — Applies the reservation discount to the matching resources in the selected resource group only.
  • Single subscription scope — Applies the reservation discount to the matching resources in the selected subscription.
  • Shared scope — Applies the reservation discount to matching resources in eligible subscriptions that are in the billing context. For EA customers, the billing context is the enrollment. For individual subscriptions with pay-as-you-go rates, the billing scope is all eligible subscriptions created by the account administrator.
  • Management group - Applies the reservation discount to the matching resource in the list of subscriptions that are a part of both the management group and billing scope.
Region The Azure region that's covered by the reservation.
VM Size The size of the VM instances.
Optimize for VM instance size flexibility is selected by default. Click Advanced settings to change the instance size flexibility value to apply the reservation discount to other VMs in the same VM size group. Capacity priority prioritizes data center capacity for your deployments. It offers additional confidence in your ability to launch the VM instances when you need them. Capacity priority is only available when the reservation scope is single subscription.
Term One year or three years. There's also a 5-year term available only for HBv2 VMs.
Quantity The number of instances being purchased within the reservation. The quantity is the number of running VM instances that can get the billing discount. For example, if you are running 10 Standard_D2 VMs in the East US, then you would specify quantity as 10 to maximize the benefit for all running VMs.

Usage data and reservation utilization

Your usage data has an effective price of zero for the usage that gets a reservation discount. You can see which VM instance received the reservation discount for each reservation.

For more information about how reservation discounts appear in usage data, see Understand Azure reservation usage for your Enterprise enrollment if you are an EA customer. If you have an individual subscription, see Understand Azure reservation usage for your Pay-As-You-Go subscription.

Change a reservation after purchase

You can make the following types of changes to a reservation after purchase:

  • Update reservation scope
  • Instance size flexibility (if applicable)
  • Ownership

You can also split a reservation into smaller chunks and merge already split reservations. None of the changes cause a new commercial transaction or change the end date of the reservation.

You can't make the following types of changes after purchase, directly:

  • An existing reservation's region
  • SKU
  • Quantity
  • Duration

However, you can exchange a reservation if you want to make changes.

Cancel, exchange, or refund reservations

You can cancel, exchange, or refund reservations with certain limitations. For more information, see Self-service exchanges and refunds for Azure Reservations.

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