Hi @ZaraJohn-9891, welcome to Microsoft Q&A forum.
Yes we can scale up and scale down the performance tier. As per the below article ,"vCore size flexibility helps you scale up or down within a performance tier and region, without losing the reserved capacity benefit. Reserved capacity also provides you with the flexibility to temporarily move your hot databases in and out of elastic pools (within the same region and performance tier) as part of your normal operations without losing the reserved capacity benefit. By keeping an unapplied buffer in your reservation, you can effectively manage the performance spikes without exceeding your budget."
However there is a limitation as mentioned in the same document "You cannot reserve DTU-based (basic, standard, or premium) databases in SQL Database."
Referenced Article: Save costs for resources with reserved capacity - Azure SQL Database & SQL Managed Instance
Please let us know if this helps or else we can discuss further on the same.
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