Requesting clarification on Azure Reserved Instance pricing

Question

Hello,

Let's consider we have a simple application hosted on a single Azure VM running 24*7. We had brought reserved instance for same.

Now our business requirement is to run this application 12*5 and run another application for 12*7 on two separate Azure VMs.

From costing perspective, please confirm:

1. Reserved instance if brought for VMs not running 24*7 might still incur same amount of charges as in case of 24*7.
2. RI only covers compute cost, not storage cost.
3. Doesn't it make sense to swap RI with Saving Plan to cover both VMs for cost optimization?

Sorry for too many questions.

Applicate your Response. Thank you!!

Answer 1

Hello @anil kumar Thank you for reaching out to us on Microsoft Q&A platform. Happy to help!

From costing perspective, please confirm:

1. Reserved instance if brought for VMs not running 24*7 might still incur same amount of charges as in case of 24*7. - Correct.  You pay a flat rate per hourfor the RI/savings plan.

2. RI only covers compute cost, not storage cost. Correct.  Although if the disk is P30 or greater you can get a storage RI for it too.

3. Doesn't it make sense to swap RI with Saving Plan to cover both VMs for cost optimization? Depends on concurrency.

 

If those two VMs are in the same region and run for the same 12 hours out of every day (with one doing 125 days a week and the other doing 127 days a week):

• The 12*7 VM's runtime is 50% so you'd need either a 3-year savings plan or 3-year RI with a discount greater than 50% to make it worthwhile.
• The 12*5 VM's runtime is 35% so for that one you'd need either a 3-year savings plan or 3-year RI with a discount greater than 65% to make it worthwhile.
• 1-Year savings plans and RI's won't be cost effective in this scenario - it's cheaper to stick with PAYG.
• In both scenarios you're going to see a lot of "UnusedReservation" type charges because of the wastage - the other 12 hours per VM per day (plus 24x7 for the one VM over the weekend) you're paying for but not using.

On the other hand, if those VM's are on opposite ends of the world and one gets shut down as the other gets turned on a savings plan is great option.

Hope this answers your question. Feel free to ping if you have any questions!

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