25 Top Azure Cost Optimization Tips & Tricks For 2024

When you neglect them, it’s frighteningly easy for your cloud costs to balloon out of control, particularly when you’re relying on cloud-first development. But tackling this challenge presents us with tough choices: what tradeoffs should you make? How do you accurately access the value you’re getting to make the right tradeoffs? To help you answer […]

by Dilyan Dimitrov

April 9, 2024

8 min read

Azure cost optimization tips

When you neglect them, it’s frighteningly easy for your cloud costs to balloon out of control, particularly when you’re relying on cloud-first development. But tackling this challenge presents us with tough choices: what tradeoffs should you make? How do you accurately access the value you’re getting to make the right tradeoffs?

To help you answer these and the other pressing questions around Azure cost optimization, we’re breaking down some simple steps you can take.

How to Know If You Need Azure Cost Optimization

In short, this is something everyone should be doing. Cost optimization is a continuous process that we should be doing regularly and not just something we do once and then you’re done forever. Your business and the environment is always going through changes and you want to remain flexible and able to adapt to new challenges, as well as capitalize on the latest technology can offer.

This means that if it’s been a while since you looked at what you spend on Azure, you’re likely missing out on Azure cost optimization opportunities.

How Do I Optimize Costs in Azure?

Before you can even begin cost optimization, you need to deeply familiarize yourself with your current spending. What are you spending money on and why?

Azure provides you with a lot of data on this subject. Familiarize yourself with all the data available in Azure and spend time identifying patterns and trends.

25 Cost Optimization Best Practices

25 Azure cost optimization tips infographic.

1. Don’t Assume There’s One Right Way

Just because one approach meets your requirements doesn’t mean you should stop there. Using different pricing models, automation, management, etc. can help you meet all your needs in a variety of ways and at different price points. So keep an open mind and explore multiple options.

2. Understand Individual Cost Components

One of the best ways to reduce your Azure costs is by breaking down all the cost components of a given solution using the principles of unit economics. This enables you to get more granular with your calculations, seeing whether specific components really provide the ROI you need.

3. Set Budget Caps

Budgets can be used to control or at least bring early awareness of your spending. They can be defined in terms of money spent or in a range of other metrics at various scopes. Setting a threshold for any of these metrics can help ensure costs don’t get out of hand. Just be aware that in production environments, stopping resources like this can have significant costs, so be aware of what will happen if that threshold is reached.

4. Use The Azure Pricing Calculator

Microsoft provides a powerful Azure pricing calculator you can use to explore the wide array of services and options available. Take some time to play around with it and be sure to test out any potential configurations to see how they compare.

5. Plan Ahead

A common cause of high costs comes when you run into issues you weren’t prepared for like unexpected host failures. To help get ahead of these potential costs, be sure to implement backups, monitoring, etc. to ensure you’re ready to tackle whatever comes your way.

6. Optimize Continuously

The factors that affect your Azure costs are always changing, so to be truly effective, your optimization around those costs also has to happen continuously. Instead of being purely reactive and only optimizing when costs get out of hand, making this a continuous process is going to help you get far better visibility and ultimately results. To make this easier, you can try establishing a review cadence to begin.

7. Automate as Much as Possible

If you’re going to take our advice and do Azure cost optimization on a continuous basis, you obviously want to manage the labor costs that might be involved as well. This is why it makes sense to automate as much of these optimizations as possible, potentially with the help of AI or an experienced partner.

8. Use Tags

Trying to wrap your head around all the resources you’re using can be challenging, but tagging them helps you quickly see what might be draining your research. You can then use these tags in reports, helping save you time when you need to present information about costs to senior leaders or other departments.

9. Combine Tags into Groups

Once you’ve set up tags for your resources within Azure, you can also create groups to further structure your costs and gain a clearer picture of your usage.

10. Remove Unused Resources

As you break down the resources you’re using within Azure and tag them, keep an eye out for those that may be going unused. These are easy places to achieve some cost optimization. Just be sure to communicate with your end users to ensure those resources don’t have some use or importance that you weren’t aware of.

11. Consider Transferring Aspects to Azure

Transferring the organizational burden of the IT aspect to Azure via their Azure Advisor tool frees you up to focus on the things that set your business apart from competitors and the general improvement of your products and/or services. This can free up resources you can devote to other areas of the business.

12. Use Azure Policy

Using the Azure Policy platform makes it easier to create a single location to track all of your Azure resource usage. From this platform you can establish guardrails, automate policy assessments, and enforce those assessments in real time, making the process of managing your costs far easier. Alternatively, you may consider a custom software solution for your Azure management.

13. Use your MSDN monthly credit.

Visual Studio subscribers get a set amount of monthly Azure credits you can use to do things like creating a personal sandbox or to gain access to Windows 10 VM images. Also be aware that you can pay for these credits as you go, so consider whether or how they’re being used to optimize your spending here.

14. Employ VM Autoscaling

One specific type of automation you can use for Azure cost optimization is autoscaling. Here, you establish rules for various resources to continuously adjust based on your usage, ensuring costs are kept to a minimum without necessarily putting hard limits on usage.

15. Try Using Azure Hybrid Benefit

If you already have licenses for on-premises SQL and Windows servers, you can use the Azure hybrid benefit to take advantage of those licenses to offset your Azure costs. Just be sure to check the specific terms of the benefit to see which of your licensing subscriptions may be eligible.

16. Optimize Around Tiered Storage Options

Be mindful of the various storage tiers and move your data around to match them. For example, you may want to keep data that is less frequently accessed or which is less sensitive in a lower tier. This can also be automated to minimize the labor needed to optimize these settings manually.

17. Use cost-effective Azure pricing options such as reserved instances and spot VMs

When doing temporary tasks like rendering, development, testing, or batch jobs, consider using Spot VMs instead of paying for standard pay-as-you-go resources. Spot VMs are deeply discounted because they represent spare Azure capacity that may be taken away at any time (with a 30 second warning). But as long as you can work around this limitation, the savings are well worth it.

18. If You’re New to Azure, Use Price Matching

If you choose a particular Azure solution that has an AWS equivalent only to later discover the AWS option is cheaper, don’t despair! For the first 90 days of your Azure subscription they provide price matching for similar services, so if you bring the difference to their attention you can expect a nice cost savings.

19. Take Advantage of Dev-Test Pricing If Available

If you’re a Visual Studio customer, you can use the special Azure plan designed for ongoing development and testing. This provides up to a 65% savings compared to standard pay-as-you-go rates. In addition, this option gives you access to several useful dev-test services like Windows Virtual DEsktop, Azure DevTest Labs, and Azure shared image gallery.

20. Consider Paying Upfront for Multiple Years

While pay-as-you-go pricing offers many opportunities to continuously optimize costs, if your needs are relatively fixed consider paying ahead of time. By using Azure’s Reserved Virtual Machine Instances (RVMIs) you can see substantial savings of up to 70-80% compared to the pay-as-you-go models.

21. Consider Azure’s Regional Pricing

Azure actually charges substantially different rates depending on the geographic region. If you can shift work from a more expensive region to another, you can see up to 25% savings.

22. Ensure You Have Anomaly Detection Alerts

Anomalies can easily lead to massive spikes in resource usage that can translate into enormous costs before they’re even detected. Using Azure’s Anomaly Detected or another similar tool can enable you to respond instantly when anomalies are detected.

23. Consider How Costs Impact Your KPIs

Ultimately, minimizing costs is only half the battle when it comes to getting the best ROI possible out of Azure. To really understand what value you’re getting for your investment, you need to accurately map how those costs link to your business’ specific goals, KPIs, etc. 

24. Don’t Forget to Review Your Bills

Helpfully, Azure provides very detailed bills breaking down precisely what your usage is and what you’re paying for. This can be a good starting point when you’re trying to wrap your head around what may be driving your costs and how you can minimize them.

25. Consider How to Support Your Teams

As much as you can automate all of these aspects of Azure, the end users are still humans with all the fallibilities that come with that. So consider the human element to your spending: how can you best support your teams? Would providing some training or upskilling around Azure usage help?

What Are the 3 Pricing Models of Azure?

Azure offers three primary pricing models to accommodate different organizational needs.

Azure pricing models infographic.

The “Pay-As-You-Go” model charges users based on actual usage, providing flexibility and scalability without long-term commitments. With this model you’ll be billed per minute with no long-term commitment required.

For predictable workloads, the “Reserved Instances” model offers discounted rates with upfront commitments for one or three years. Azure provides Virtual Machines (VMs) that are pre-purchase for 1 or 3 years. This option can net you a discount of up to 72% compared to Pay-As-You-Go prices.

Alternatively, the “Azure Hybrid Benefit” model allows users to leverage existing on-premises licenses for discounted rates on Azure services, maximizing cost savings. You can bring any existing Windows Server or SQL Server licenses you use locally to the cloud. The cost of those licenses is factored into the price, allowing you to get a discount on VM per-hour cost. Azure Hybrid Benefit applies to Windows Server VMs, SQL Server VMs, and the Azure SQL Database service. 

Azure also offers a 12-month free tier that lets companies use some of their services with a limited allowance. For example, with this option a VM will be available to you for 750 hours.

The different options enable businesses to make cost effective decisions and adjust to their usage patterns.

How Dreamix Can Help You Optimize Your Azure Cloud Costs

Depending on the complexities of your business model and the capabilities and expertise of your team, it might make sense for you to outsource the task of managing your Azure cloud costs. An experienced partner, such as Dreamix, can help greatly alleviate the burden of operations and infrastructure support.

Dreamix offers full time database and middleware support and has over 10 years of experience working with customers from a wide variety of industries. Our proactive approach will help you identify the best solutions for your needs so you can focus on the parts of your business you excel at and reach your full potential.

A reader who loves writing, a marketer who loves tech, a nerd who loves sports. Dilyan, our resident writer, half-jokes that his days are filled with everything you can think of - except free time. He joined our team several years into his copywriting career - and he seems to feel at home here. Because, as he puts it, “there’s always cake at the office”.  If he doesn’t have his nose buried in a book, you can typically find Dilyan writing his latest piece, tinkering with his PC, or off swimming/cycling somewhere.