Two people sat in front of laptops who are calculating Azure costs
Cloud Cost Control  / Cloud Management

Understanding Your Microsoft Azure Account Costs

Microsoft Azure is one of the biggest cloud providers. If you’re new to cloud, and are considering this service, here’s our guide to Microsoft Azure costs.

Christina Harker, PhD

Christina Harker, PhD


When it comes to choosing a cloud service provider, there’s a wide range of options to select from. Out of these, Microsoft Azure is one of the giants of the industry.

Microsoft Azure offers developers specialist tools to create and deploy digital applications. One of its biggest draws is how customisable its resources are. There are a wide number of different services that can be used and combined. These can be used to create a cloud solution that fits an organisation’s objectives.

Another ace up Microsoft Azure’s sleeve is the extent of services it offers. These cover PaaS, SaaS, and IaaS applications. It offers typical Cloud services. These include virtual machines (VMs), object storage, and Content Delivery Networks (CDNs). However, it also offers Microsoft Windows tools too, as well as usage of Microsoft’s data centres. All of these resources operate as standalone services or can be combined to create a unique solution.

It’s these individual services that pricing is based on. The more Azure resources you use, the higher the price.

Microsoft Azure provides its pricing upfront. There are also quite a few discounts available to make use of. However, calculating how much these actually cost can be quite the task. There are a lot of individual services to look at. The way they are charged also changes from service to service. This is why Azure cost management is important.

What is Microsoft Azure Pricing Based on?

A lot of Microsoft Azure services can be allocated into one of the following categories, although there are many more.

  • Computing

  • Storage

  • Memory

  • Networking

  • Management services

  • Content Delivery Network (CDN)

Each of these service categories operate differently. As such, they don’t use the same measurement for their pricing models. For instance, virtual machines (VM) are priced on CPU, memory and storage. Databases, on the other hand, are priced on the type of resource, the instance, and how it’s generated.

All these different pricing models generally look at the following:

  • The type of service - what specific resource is being used?

  • The operating system - are you using Windows or Linux? Windows is more expensive, because you need a software licence to use it. Linux is free, on the other hand.

  • The capacity - this can also be known as the instance type. Basically, how many resources or how much of a resource is needed? In this case, capacity can mean storage volume, network capacity, memory, or dozens of other things. Some resource types can also have multiple combinations.

  • The locations of instances - this is where your operating VM is based. There are 60 regions worldwide, and these are available in 140 countries.

There’s lots of flexibility in the solutions you can choose. And as such, there are different pricing models you can choose from.


Usage pricing models are based on virtual machines (VMs) usage. These are known as ‘units of usage’. Every second a VM is running is rounded up to the nearest minute. This is used to calculate the usage rate. There are different options you can choose to base your VM usage on.


This is the most simple pricing model. It’s billed by the second, so there’s no long-term commitment or upfront payments. It’s a good option for flexible and short-term workloads.

Paying in advance 

Reserved Instances 

These are VMs that are pre-purchased for one or three years, in a specific location. This can save users up to 72% when compared to pay-as-you-go. This option is good for large scale projects, fixed budgets, and ongoing usage.

Do note: If you want to cancel before the instance is up, you’ll be charged an early termination fee.

Spot Instances 

This is when you purchase any unused computing power. This comes from Azure data centres that have unused capacity. Users can get a discount up to 90% when compared to pay-as-you-go. This is suitable for workloads that can be interrupted, are testing, or aren’t urgent.

Do note: These instances can be disrupted or shut down at any moment.


Some Microsoft Azure services don’t come with a fee. There are two categories of these free services - Free Tier and Forever Free Services.

Free Tier  

The free tier provides free use of certain services for the first 12 months. However, these all have usage limits. If you exceed these limits, you will be charged. New users also receive $200 credit to go towards costs, which can be applied to exceeded limits.

If you want to use a service that isn’t included in this free tier, you will be charged.

Forever free services

Specific services are always free. You can find out what these services are here.


The different services that Microsoft Azure offers all have different pricing models. Let’s take a look at them.

Virtual Machines Pricing

Virtual Machines (VMs) are the processing power behind digital applications. They operate in what is known as instances - this is when a VM is running.

These VM instances, as well as their sizes, are split into six different categories. These categories are what their pricing is based on. These prices are also determined on what operating system is being used, as well as the region the VM is in.

  • General Purpose - This VM instance is the default category. It’s most suitable for small to medium workflows.

  • Compute Optimised - This VM instance is most suitable for workflows that need specific levels of processing power.

  • Memory Optimised  - This VM instance is most suitable for workflows that need specific levels of memory and database information transfers.

  • Storage Optimised  - This VM instance is most suitable for workflows that need specific levels of storage.

  • Graphical Processing Units (GPU)  - This VM instance is most suitable for workflows that require high levels of processing and graphics. This can help with projects such as artificial intelligence and data visualisation.

  • High performance computing (HPC) - This VM instance is most suitable for workflows that require large, complex processing tasks that need a variety of different resources

Storage Pricing

There are multiple storage services in Azure. These all have different functions, and are suitable for different scenarios. Each of these has its own pricing model. Here are a couple of the most popular options:

  • Azure Blob Storage - This storage option allows for infinitely scalable object storage. This means that a very large amount of unstructured data can be stored, and be easily accessed.

  • Azure Files - This option allows for cloud-hosted files to be mounted on VMs. This means that this data can be accessed by users through the VM’s filing system. There are different tiers for this option - premium, optimised, hot and cold. There are also additional charges for snapshots, transactions on data, and the amount of data being transferred.

The amount of storage required is priced into these too. The same is the case for redundancy needed. This is when data is stored in two places at once.

Networking Pricing

Cloud networking is the infrastructure that hosts and connects an organisation’s resources. It’s this that allows different resources to communicate with each other. There are different networking services on Microsoft Azure, which all have different costs. These include:

Virtual Network (VNet)

Microsoft Azure can have isolated and private networks in its cloud infrastructure. These are known as Virtual Networks, or VNets. This is a secure environment that an organisation’s resources can operate in. This is how they’re priced:

  • The first 50 VNets are free. Any additional ones are subsequently charged.

  • Inbound and outbound data transfer to/from the VNet have different charges.

  • The location of the VNet impacts the price of data transfers.

  • If users want to connect to a VM from the internet, a public IP address needs to be associated with it. These are priced on usage per hour.

VPN Gateway 

Microsoft Azure provides a specialist service to send encrypted traffic over the internet. This can go from a VNet to an on-premise network. It’s known as a VPN Gateway. It’s an on-premise network that only employees can access. The pricing of this is based per hour, and has capacity limits.

Bandwidth Pricing

Bandwidth is the amount of data that is going in and out of data centres. In this case, Azure’s. These are the locations where data is stored. Bandwidth is priced by where the data is going to, as well as what region it is coming from. 

  • Inbound data transfers are free. 

  • Outbound data transfers are free for the first 5 GB per month. After this limit is reached, outbound transfers are charged by volume.

Database Pricing

Microsoft Azure offers a range of different database services. A lot of these are SQL databases. These are a type of database that operate on cloud computing platforms. These are all priced by usage, processing power, and the Azure region they’re based in.

These are some of the most popular ones:


There are a range of different managed database options. These are operated by a third party, rather than an in-house team in an organisation. 

Single Database

This is an isolated SQL database, and is managed by a server. This is suitable for small projects.

Elastic Pool

This is a selection of SQL databases. This option allows them to be managed together, and is good for scaling.

Function Pricing

Azure Functions is a SaaS, and offers serverless computing functionality. This service is suitable for APIs and small apps that run independently.

These serverless services are priced at a total monthly amount. This is based on the amount of executions (or tasks) that have been triggered. The amount of time these have taken to complete is factored into the cost too.

The first 1,000,000 executions are free. However, executions after this are charged.

Support Costs 

Microsoft Azure offers different tiers of support plans. These are all priced separately. These support packages consist of:

  • Basic - This is free and available to everyone.

  • Developer - Basic support for fixes. There are limited support windows.

  • Standard -  Helps with more severe cases. Support is available 24/7

  • Professional Direct - Helps with all types of cases, including severe. Support is available 24/7. Training. 

Discount options

Microsoft Azure offers discount options for its services. Let’s take a look at them.

Azure Hybrid Benefit 

This discount can be used by organisations that have Microsoft licences in their on-premise data centres. Organisations can get a discount of up to 85% of VM costs.

Azure Development/Testing Discount

Organisations that are undergoing testing and development projects can get a discount too. This consists of:

  • Running Windows VMs at the same cost of Linux VMs. Essentially, this is a free Microsoft licence.

  • 55% discount on a Microsoft Azure SQL Database, 

  • 50% discount on Logic Apps.

AWS Price Matching

Microsoft Azure also offers Amazon Web Services (AWS) price matching on similar services. You can learn more about this here.

Where Microsoft Azure Costs Can Spiral

Microsoft Azure costs can get out of control if a close eye is not kept on what is being used. Examples of costs unexpectedly increasing include:

  • Paying for VMs that are too big

  • Unused instances not being terminated

  • Specific resources not being used fully

  • Budgets not forecasted and implemented

The trick is to ensure that everything is being used to its full potential.

Understanding Cost Management Tools

Microsoft Azure has a range of cost management tools at its disposal. These are all included in your subscription. These include:

  • Azure Cost Analysis - helps users manage cloud spend

  • Azure Budgets - helps users set budgets and caps

  • Azure Advisor - provides recommendations on how to optimise the services set up

Azure Pricing Calculator

Microsoft Azure also provides a pricing calculator. This can be used to estimate how much certain configurations of resources will cost.


Microsoft Azure is one of the biggest players in cloud services providers. Not only does it offer cloud services, but it lets users use Microsoft licensed resources. Because of the sheer range of services available, it’s important to track the resources used. It’s easy for costs to increase if resources aren’t being effectively managed.