Overview of the cost optimization pillar

The cost optimization pillar provides principles for balancing business goals with budget justification. The principles help you create a cost-effective workload while avoiding capital-intensive solutions. Cost optimization is about looking at ways to reduce unnecessary expenses and improve operational efficiencies.

Use the pay-as-you-go strategy for your architecture, and invest in scaling out, rather than delivering a large investment-first version. Consider opportunity costs in your architecture, and the balance between first mover advantage versus fast follow. Use the cost calculators to estimate the initial cost and operation costs. Finally, establish policies, budgets, and controls that set cost limits for your solution.

To assess your workload using the tenets found in the Microsoft Azure Well-Architected Framework, see the Microsoft Azure Well-Architected Review.

We recommend exploring the following videos to dive deeper into Azure cost optimization:

Azure Well-Architected Framework cost optimization articles

The Azure Well-Architected Framework includes the following articles in the cost optimization pillar:

Cost area	Description
Capture cost requirements	Start your planning with a careful enumeration of requirements. Make sure the needs of the stakeholders are addressed. For strong alignment with business goals, the stakeholders must define the needs not the vendors.
Cost of resources in Azure regions	Cost of an Azure service can vary between locations based on demand and local infrastructure costs.
Governance	Understand how governance can assist with cost management. This work benefits your ongoing cost review process and offers a level of protection for new resources.
Estimate the initial cost	It's difficult to attribute costs before deploying a workload to the cloud. If you use methods for on-premises estimation or directly map on-premises assets to cloud resources, the estimate is inaccurate.
PaaS	Look for areas in the architecture where it might be natural to incorporate platform-as-a-service (PaaS) options. These options include caching, queues, and data storage. PaaS reduces time and cost of managing servers, storage, networking, and other application infrastructure.
Consumption	A common way to estimate cost is by considering workloads on a peak throughput. Under consistently high usage, consumption-based pricing can be less efficient for estimating baseline costs when compared to the equivalent provisioned pricing.
Provision cloud resources	Deployment of workload cloud resources can optimize cost.
Monitor cost	Azure Cost Management has an alert feature. Alerts are generated when consumption reaches a threshold.
Optimize cost	Monitor and optimize the workload by using the right resources and sizes.
Tradeoffs for costs	As you design the workload, consider tradeoffs between cost optimization and other aspects of the design, such as security, scalability, resilience, and operability.

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Use the cost optimization principles to guide you in your overall strategy.

Principles