onDemand cost for VMs running in reservations

Question

Hello,

We found multiple virtual machine in our estate which is running on reservation and ondemand. We checked cost break up and found ondemand cost is negligible (< 1 buck in a month). The question is why there is ondemand charges when VMs are in reservation. If VMs are really running onDemand for some time, why ondemand cost is so low?

Is reservation billed internally on hourly basis ? I meant if Azure find better opportunities to save cost by re-assigning the reservation to some other VM at 11:45AM, will azure re-assign the reservation immediately or wait till 12AM?

Given reservation is a billing mechanism, I think it should not be that much complicated instead Azure would wake up and decide which VMs are best candidate for reservation and bill them accordingly. VM without reservation would be billed wither on Saving plan or onDemand.

Applicate your Response. Thank you!!

Answer 1

Hello, @Anil Kumar !

Why am I seeing a small On-demand Capacity Reservation bill when using both Reserved Instances and On-demand Capacity Reservation VMs?

The billing team has the final say when it comes to billing related issues and you can always create a billing support ticket for answers regarding billing questions. To accurately answer this question, we would need to see the full billing details which we can't do in the forums however I do have a couple theories which may be helpful.

• Azure VMs are billed by the minute which could lead to small charges if there are slight gaps in reservation coverage.
• On-demand Capacity Reservations can be used immediately and you are charged for the capacity reservation if it is not in use. There may have been a slight delay in deployment of the qualifying VMs.
• Only compute resources are covered by Reserved Instances, and resources like networking can incur small fees.

Regarding how Reserved Instances are billed, it is an hourly use it or lose it system that recognizes partial hours used. In your case the VM would be reassigned and would not wait until the end of the hour. More detail and specific examples are available in the documentation:

https://learn.microsoft.com/en-us/azure/cost-management-billing/manage/understand-vm-reservation-charges#reservation-discount-for-non-windows-vms

"In hour 1, instance 1 runs for 0.75 hours and instance 2 runs for 0.5 hours. Total usage for hour 1 is 1.25 hours. You're charged the pay-as-you-go rates for the remaining 0.25 hours."

If you still have questions about your bill, I would recommend reaching out to the billing team by creating a billing support ticket. They'll have access to the details of your bill and will be able to provide a definitive answer.

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