Alexis Kestler
The cloud has transformed how businesses operate by providing easy access to computing resources. With just a few clicks, you can provision the infrastructure needed to deploy applications and scale up or down based on demand. This agility comes with a catch, however – the ease of adding resources can quickly lead to out-of-control cloud spending if not properly managed.
With Microsoft Azure being one of the top cloud providers, many organizations leverage it for application hosting, data storage, analytics, and more. While the pay-as-you-go pricing model is convenient, costs can accumulate rapidly across Azure services if you‘re not diligent about optimizing your usage and resources.
In this guide, we‘ll explore some best practices for managing and optimizing Azure costs through actionable steps you can take to maximize value and minimize waste when using Azure.
Why Azure Cost Management Matters
With Azure, you only pay for the resources you use, but that doesn‘t mean you can neglect paying attention to what you‘re spending. Here are some key reasons why cost management with Azure is critical:
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Avoid bill shock – It‘s easy to overprovision resources which can lead to unexpectedly high bills at the end of the month. Cost management helps you anticipate and control expenses.
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Increase efficiency – Identifying idle or underutilized resources allows you to right-size workloads and reduce waste.
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Enable accountability – Tagging resources and monitoring usage by department or project allows you to allocate costs and hold teams accountable.
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Optimize spending – Analyzing spending across services and resource groups helps you find opportunities to optimize and reduce costs.
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Stay within budgets – Setting budgets with alerts ensures you don‘t overspend on Azure services even as resource usage scales up.
Proactively keeping Azure expenses in check is vital for cost-effective cloud usage. Now let‘s look at some best practices you can implement.
6 Ways to Optimize Azure Costs
Here are six impactful steps you can take to optimize costs in your Azure environment:
1. Right-size underutilized virtual machines
One of the easiest ways to optimize Azure costs is by resizing virtual machines (VMs) to appropriate sizes based on actual resource demands. It‘s common for organizations to overprovision VMs just in case more capacity is needed down the road.
Azure provides various VM size options, from basic A-series for workloads like web servers, to memory optimized M-series for databases. Choosing the right sized VM can significantly reduce costs.
Use performance monitoring tools to look at CPU, memory, disk, and network usage over time. For VMs that are underutilized, resize them to a smaller VM size that better matches your actual resource needs. The PowerShell AzureRM module provides the Set-AzureRmVM cmdlet to resize VMs.
Right-sizing VMs is an impactful way to eliminate waste and overprovisioning.
2. Deallocate virtual machines in off-hours
Another way to optimize VM costs is by deallocating VMs during scheduled off-hours, such as evenings and weekends. In Azure, you pay for the VM even when it is stopped but still allocated.
Deallocating releases the VM‘s resources and stops billing until you start it up again. This can lead to big savings for VMs that don‘t need to run 24/7. You can manage start/stop times through the Azure portal or automate it with Azure Automation.
Be aware that deallocating a VM also releases its public IP address, so you‘ll need to account for that in your automation scripts and networking configuration.
3. Configure auto-shutdown for unused VMs
It‘s easy to forget to turn off lab and test VMs when you‘re done using them, which wastes money. Using Azure‘s auto-shutdown capability automatically deallocates unused VMs to stop wasted billing.
In the Azure portal, open the VM‘s Configuration settings, and under Operations, enable auto-shutdown with your desired off-hours schedule. You can also apply auto-shutdown policies across groups of resources using Azure Policy.
4. Delete unused storage accounts
Azure storage accounts accrue costs simply by staying provisioned, even if they are unused. Scan your environment for unattached storage accounts not tied to any workloads and delete them to avoid paying for unused resources.
This same concept also applies to unused networking resources, Key Vaults, and other services. Review them regularly and clean up what you don‘t need.
5. Use Azure reservations for steady-state workloads
Azure reservations allow you to pre-purchase compute resources at a discounted rate for one or three year terms. This offers big savings over pay-as-you-go pricing for workloads with steady, predictable usage like databases.
Some key tips for leveraging Azure reservations:
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Assess historical VM usage to determine appropriate reservation quantities and terms. You want to match expected sustained usage to minimize waste.
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Reserve when usage is constant. Don’t reserve erratic spikes in usage that may not recur.
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Focus on reserving infrastructure like DB servers over dev/test resources that have intermittent usage.
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Purchase reservations in lower environments first to confirm sizing before reserving production capacity.
6. Right-size underutilized PaaS services
In addition to IaaS resources like VMs and storage, also assess right-sizing opportunities for Azure‘s PaaS services. For example:
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App Service plans – Monitor usage metrics to determine if you can scale down to lower tier plans.
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SQL Database – Review DTU usage over time to detect overprovisioned databases. Scale down to lighter SLA tiers when possible.
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Redis Cache – Downsize to smaller cache sizes if the max memory is under 50% utilized.
Regularly reviewing utilization metrics for PaaS services allows you to optimize provisioned capacity and save on monthly service costs.
Leverage Azure Cost Management Tools
While the above tips help you manually optimize costs, Azure also provides several built-in tools to give visibility and control over spending:
Azure Cost Management – Provides cloud cost monitoring, allocation, and optimization capabilities. Features budgets, forecasts, and recommendations.
Azure Advisor – Analyzes resource configurations and usage telemetry to surface recommendations for high availability, security, performance, and cost.
Azure Monitor – metrics explorer and dashboards help you visualize resource utilization and spending by subscription, resource group, and service.
Azure Consumption API – For developers, this API allows you to programmatically pull Azure cost and usage data into custom cost analysis applications.
Take advantage of these tools to gain deeper insights into spending patterns and opportunities to optimize your Azure usage.
Best Practices in Action
Let‘s walk through a simple example of how an organization could apply some of these cost optimization best practices:
Contoso Media has dozens of apps and services running on Azure, incurring over $150,000 in monthly costs. By analyzing spending in Cost Management, they realize that media encoding VMs account for over $45,000 each month.
Examining metrics in Azure Monitor shows that CPU usage on the encoding VMs peaks at only 40%. The team downsizes the VM size from D4 to D2, resulting in a 30% cost reduction with negligible performance impact.
They also shutdown test VMs each night using auto shutdown schedules, reducing testing infrastructure costs by 60%. With Azure reservations, they will save an additional $5,000 per month on steady-state SQL and MySQL database VMs.
By actively monitoring usage and right-sizing resources, Contoso can achieve over $25,000 in Azure savings each month while still delivering the same workloads and meeting application SLAs.
Achieve Cloud Cost Optimization
As you can see, there are many impactful steps you can take to control your Azure spending through resource rightsizing, usage monitoring, automation, reservations, and more. Cloud cost optimization is an ongoing discipline. Continually assess your usage, leverage available tools, and implement savings opportunities to maximize the business value you achieve with Azure.
