Azure pricing: How to calculate costs of Azure products and services

In our previous blogs we explained the Azure pricing structure and how customers can estimate their project costs when migrating to Azure or building a cloud-native application. We introduced readers to Azure Migrate, the Total Cost of Ownership (TCO) Calculator, pay-as-you-go account, and the Azure Architecture Center.  

Now we will go a step further to address the needs of a customer who has decided to migrate their workloads or deploy cloud-native solutions and wants to budget for the specific Azure services they’ll be using. We will continue using the example of our digital media company, Contoso, and how they use Azure services to feel confident they’re getting the best value at every stage of their cloud journey.

Discovering Azure pricing tools

With a clear picture of the solutions they want to migrate, the Azure services (like Azure OpenAI Service) to employ, and the involved costs, Contoso is ready to finalize their monthly budget. It is important for the digital media company to only pay for what they need, and they are able to maximize their cloud spending by leveraging Azure’s pricing tools and benefits.

First, the Azure pricing calculator allowed Contoso to calculate their monthly and hourly cost for each cloud service before deployment. This interactive tool tailored estimates based on the Azure services they plan to use, estimated usage quantities, and their region. They know, for example, that their OpenAI chatbot will be running E4v5 VMs on West U.S., 24 hours a day for at least 1 year, so they purchase Azure Reserved Virtual Machine Instances to save roughly 40% on their compute cost*.

They also knew that they will consistently be running a standard series 8 vCore provisioned compute size for Azure SQL Standard-series (Gen5) General Purpose in Sweden Central, so they purchased Azure Reservations to save roughly 35% compared to pay-as-you-go*. Reserving a set number of high-performance resources for a one-year term secures a substantial discount, allowing Contoso to allocate more budget towards developing innovative content creation tools, while ensuring their rendering pipeline remained stable and cost-effective. 

Contoso also wanted to leverage their existing investment in Windows Server licenses with their Azure virtual machines. When deploying both the VMs and Azure SQL Database they took advantage of the Azure Hybrid Benefit to apply their existing Windows Server and SQL Server with Software Assurance to save on their Operating Service costs. This not only simplified the migration process, avoiding the need to purchase new licenses, but also significantly reduced the cost of running Windows-based workloads in the cloud.

Budget visibility while maximizing resources

By utilizing the Azure pricing calculator, Azure Reservations, and Azure Hybrid Benefit, Contoso gained the confidence to embrace the cloud resources they need while maintaining visibility into their budget. The potential for cost savings doesn’t end there, however. In our final blog we’ll look at how they can optimize their Azure workloads through additional pricing offers and architecture reviews.  

*Example only. Actual savings may vary based on region, instance type, or usage.

Additional resources:

Azure Enablement Show: Understand Azure pricing & resources

Blog: Get the best value in your cloud journey with Azure pricing offers and resources

Blog: Azure pricing | How to navigate Azure pricing options and resources

Blog: Azure pricing | How to estimate Azure project costs  

Blog: Azure pricing | How to optimize costs for your Azure workloads

Azure pricing skilling content collection

Estimate costs with the Azure pricing calculator - Microsoft Cost Management | Microsoft Learn