Azure Cost Optimization Overview This guide covers Azure cost management tools, strategies, and best practices for optimizing cloud spending. Cost management is tested across Azure Administrator, Solutions Architect, and FinOps certifications.
Tool Purpose Access Cost Management + Billing Analyze and manage costs Azure Portal Azure Advisor Optimization recommendations Azure Portal Azure Pricing Calculator Estimate costs before deployment Web tool TCO Calculator Compare on-prem vs Azure costs Web tool Azure Budgets Spending alerts and automation Azure Portal Cost Analysis Visualize spending by dimension Azure Portal Azure Reservations Commit for discounts Azure Portal Savings Plans Flexible commitment pricing Azure Portal
Compute Cost Optimization VM Pricing Models Model Discount Commitment Best For Pay-as-you-go 0% None Unpredictable workloads Azure Savings Plan Up to 65% 1 or 3 year Flexible compute Reserved Instances Up to 72% 1 or 3 year Steady-state workloads Spot VMs Up to 90% None (evictable) Fault-tolerant workloads Dev/Test Pricing Up to 55% Visual Studio subscription Dev/test environments Azure Hybrid Benefit Up to 85% (with RI) Existing Windows/SQL licenses Windows/SQL Server workloads
Right-Sizing Strategy Tool Action VM right-sizing Azure Advisor Resize underutilized VMs Auto-shutdown Azure Automation Stop dev/test VMs after hours Scale sets VMSS Auto-scale based on demand Burstable VMs B-series Variable workloads with low baseline ARM-based VMs Dpsv5/Epsv5 (Ampere) 20-40% savings for Linux workloads
Storage Cost Optimization Blob Storage Tiers Tier Use Case Cost (per GB/month, East US) Hot Frequently accessed ~$0.018 Cool Infrequent access (30+ days) ~$0.01 Cold Rarely accessed (90+ days) ~$0.0036 Archive Long-term archive (180+ days) ~$0.00099
Storage Strategies Strategy Action Savings Lifecycle management Auto-tier blobs by age 50-95% Delete old snapshots Clean up VM and disk snapshots Variable Premium to Standard Downgrade disks where performance allows 40-60% Reserved capacity 1 or 3 year storage reservations Up to 38% Soft delete retention Reduce retention period Reduce storage waste
Database Cost Optimization Strategy Service Action Reserved capacity Azure SQL, Cosmos DB 1 or 3 year commitments Serverless tier Azure SQL Auto-pause for dev/test Elastic pools Azure SQL Share resources across DBs DTU to vCore Azure SQL Right-size compute model Auto-scale RUs Cosmos DB Scale RUs based on demand Azure Hybrid Benefit Azure SQL Use existing SQL Server licenses Free tier Cosmos DB 1,000 RU/s + 25 GB free
Networking Cost Optimization Strategy Description Savings Private endpoints Avoid public internet egress Reduced egress Azure CDN Cache content at edge Reduced origin traffic Proximity placement groups Reduce inter-VM latency/traffic Performance + potential cost Hub-spoke topology Centralize shared services Reduce duplicate resources Azure Front Door Global load balancing + caching Optimized routing
Azure Hybrid Benefit License Benefit Savings Windows Server Use existing licenses on Azure VMs Up to 40% SQL Server Use on Azure SQL/VMs Up to 55% Windows Server + RI Combined savings Up to 80% SQL Server + RI Combined savings Up to 85% Linux (RHEL/SUSE) Use existing subscriptions Up to 70%
Organization-Level Optimization Strategy Description Management groups Organize subscriptions for governance Cost allocation Tag resources for chargeback Budget automation Auto-shutdown on budget threshold Azure Policy Enforce allowed VM sizes, regions Resource locks Prevent accidental deletion Advisor Score Track optimization progress
Cost Optimization Checklist Documentation Links Azure Cost Management: https://learn.microsoft.com/en-us/azure/cost-management-billing/ Azure Advisor: https://learn.microsoft.com/en-us/azure/advisor/ Azure Pricing Calculator: https://azure.microsoft.com/en-us/pricing/calculator/ Azure Reservations: https://learn.microsoft.com/en-us/azure/cost-management-billing/reservations/ Azure Hybrid Benefit: https://azure.microsoft.com/en-us/pricing/hybrid-benefit/