Microsoft recently announced Azure Savings Plans for Compute, providing customers with an easy and flexible way to save significantly on compute services compared to pay-as-you-go prices by committing to spend a fixed hourly amount for one or three years.
With the new pricing offer, customers can, according to the company, save up to 65% on compute costs, compared to pay-as-you-go pricing, in addition to existing offers in the market, including Azure Hybrid Benefit and Reservations. By selecting services such as Virtual Machines (VMs) and container instances, customers are covered by the plan at reduced prices. However, when the usage exceeds the hourly commitment during the plan’s duration, customers will be billed at their regular pay-as-you-go prices.
Through the Cost Management + Billing section of the Azure Portal and in Azure Advisor, customers can have insights into their historical compute usage and receive recommendations. In a Tech Community blog post, Kyle Ikeda, a senior product marketing manager at Microsoft, explains:
Using these recommendations, customers can buy a 1-year savings plan and commit to $5 USD of spend per hour. Once purchased, Azure automatically applies the savings plan to compute usage globally on an hourly basis, helping customers achieve optimized savings. The plan works by providing customers with access to lower prices on select compute services up to customer’s $5 hourly commitment, regardless of region, instance series, and operating system.
The hourly commitment is at a fixed price; any usage below or at the price level is billed as per the savings plan. Usage above in the hour is billed separately at pay-as-you-go prices.
Source: https://azure.microsoft.com/en-us/pricing/offers/savings-plan-compute/#how-it-works
Microsoft offers reservations similar to saving plans; however, they provide less flexibility, according to John Savill, a principal technical architect at Microsoft. In a YouTube video, he states:
If I go and create my Azure saving plan for compute, if that was the Azure reservation this very small square (one particular VM), what's covered now in this new savings plan is everything, every region, every computer service included (predominantly premium SKU’s).
Therefore, it might confuse customers as Wesley Miller, a research analyst - Microsoft Identity, Security, and Management at Directions on Microsoft, tweeted:
Sigh. It’s like reservations. But it’s not. But it is. But it’s not.
In addition, he tweeted:
Okay... Azure savings plan for compute looks kind of interesting.
But be careful how much cash you leave on the table for Microsoft upfront. There's not much benefit to that.
More details on Azure Savings plans are available on the documentation landing page and FAQs.
