Mastering Azure Cost Optimization - A Comprehensive Guide
Published Mar 14 2024 01:30 AM 3,415 Views


Hi folks! My name is Felipe Binotto, Cloud Solution Architect, based in Australia.


I understand and you probably do as well, that cost savings in the cloud is a very hot topic for any organization.


Believe it or not, there is a huge number of people (including me) doing their best to allow you to get the best value for your money. This is imperative for us.


The plan here is to highlight the most used cost savings artifacts as well as the most effective cost savings actions you can take for cost savings.


I will give you some personal tips, but most of the content already exists and therefore my objective is to have a consolidated article where you can find the best and latest (as of March 2024) cost optimization content.


The content will vary from teams ranging from Product Groups to Cloud Solution Architects which can cover anything from the ins and outs of people actively working on our products to the people actively deploying and implementing them in the field.


Key Strategies for Azure Cost Optimization

There are a huge number of areas where cost optimization can be applied to. These range from doing some type of remediation to just understanding and having ways to visualize your spendings.


I don’t intend to cover every single possible way to achieve cost savings but here is what I will cover:


  • Hybrid Benefit (both Windows and Linux)
  • Reservations (for several resource types)
  • Savings Plan
  • Idle Resources
  • SKUs
  • Resizing
  • Logs
  • Workbooks
  • Dashboards
  • FinOps

In my experience, if you invest some time and take a good look at the above list, you will be able to achieve good savings and be able to invest those savings in more innovative (or maybe security) initiatives in your company.


Hybrid Benefit

Azure Hybrid Benefit is a cost-saving feature that allows you to use your existing on-premises Windows Server and SQL Server licenses with Software Assurance or qualifying subscription licenses to run workloads in the cloud at a reduced cost. This benefit now also extends to Linux (RHEL and SLES) and Arc-enabled AKS clusters. You can also leverage Hybrid Benefit on Azure Stack HCI. It's an effective way to reduce costs for organizations that have already invested in Microsoft or Linux licenses and are looking to migrate or extend their infrastructure to Azure.


@arthurclares has a nice blog post on this.


For information on Hybrid Benefit for Arc-enabled AKS clusters, check this page.

For more information on Hybrid Benefit for Azure Stack HCI, check this page.


Reservations and Savings Plans

Azure Reservations help you save money by committing to one-year or three-year plans for multiple products. This includes virtual machines, SQL databases, AVS, and other Azure resources. By pre-paying, you can secure significant discounts over the pay-as-you-go rates. Reservations are ideal for predictable workloads where you have a clear understanding of your long-term resource needs.


The Azure Savings Plan is a flexible pricing model that offers lower prices on Azure resources in exchange for committing to a consistent amount of usage (measured in $/hour) for a one or three-year period. Unlike Reservations, which apply to specific resources, the Savings Plan applies to usage across any eligible services, providing more flexibility in how you use Azure while still benefiting from cost savings.


@BrandonWilson already has a nice blog post on this.


Idle Resources

Identifying and managing idle resources is a straightforward way to optimize costs. Resources such as unused virtual machines, excess storage accounts, or idle database instances can incur costs without providing value. Implementing monitoring and automation to shut down or scale back these resources during off-peak hours can lead to significant savings.


@anortoll has already blogged about this and the post has workbooks that can be used to locate those idle resources.


@Dolev_Shor available here.



Selecting the SKUs for your Azure resources is crucial for cost optimization. Azure offers a variety of SKUs for services like storage, databases, and compute, each with different pricing and capabilities. Choosing the most appropriate SKU for your workload requirements can optimize performance and cost efficiency.


A classic example is the over sizing of Virtual Machines. However, there are other resources to consider too. For instance, you deploy an Azure Firewall with the Premium SKU, but do you really need premium features such as TLS or intrusion detection? Another example are App Service plans which in the v3 SKU can be cheaper and enable you to buy Reservations.


Here is a blog post by Diana Gao on VM right sizing.

Here is another blog post by Werner Hall on right sizing of Azure SQL Managed Instances.



Analyzing logs can provide insights into resource utilization and operational patterns, helping identify opportunities for cost savings. For instance, log analysis can reveal underutilized resources that can be downsized, or inefficient application patterns that can be optimized. Azure offers various tools for log analysis, such as Azure Monitor and Log Analytics, to aid in this process.


However, logs can also be the source of high cloud spending. The key is to understand what you need to log, what type of logs you need and strategies to minimize the cost of storing those logs.


For example, when you are ingesting logs in Log Analytics, depending on the log you are ingesting, you can configure certain tables in the Log Analytics workspace to use Basic Logs. Data in these tables has a significantly reduced ingestion charge and a limited retention period.


There's a charge to search against these tables. Basic Logs are intended for high-volume verbose logs you use for debugging, troubleshooting, and auditing, but not for analytics and alerts.


Depending on the amount of data being ingested, you could also leverage commitment tiers in your workspace to save as much as 30 percent compared to the PAYG price.


Furthermore, you could also structure your logs to be archived after a period of time and save on costs.


Refer to this page to learn more about these options and to this page to learn more about best practices.



Azure Workbooks provide a customizable, interactive way to visualize and analyze your Azure resources and their metrics. By creating workbooks, you can gain insights into your spending patterns, resource utilization, and operational health. This can help identify inefficiencies and areas where cost optimizations can be applied.


Many workbooks are available. A few examples are:




Azure Dashboards offer a unified view of your resources and their metrics, allowing for real-time monitoring of your Azure environment. Custom dashboards can be configured to focus on cost-related metrics, providing a clear overview of your spending, highlighting trends, and pinpointing areas where optimizations can be made.


You can make your own dashboards, but a few are already available, and you can customize them to your needs.


@sairashaik made available two very useful dashboards available here and here.


Another one which has been available for a long time is the Cost Management Power BI App for Enterprise Agreements.



FinOps, or Financial Operations, is a cloud financial management practice aimed at maximizing business value by bringing financial accountability to the variable spend model of the cloud. It involves understanding and controlling cloud costs through practices like allocating costs to specific teams or projects, budgeting, and forecasting. Implementing FinOps practices helps organizations make more informed decisions about their cloud spend, ensuring alignment with business goals.


Learn how to implement your own FinOps hub leveraging the FinOps Toolkit.


Additional Resources

The following are some additional resources which provide valuable information for your Cost Optimization journey.


Advisor Cost Optimization Workbook

Plan to manage costs

What is FinOps?

The Azure FinOps Guide

Cost Optimization Design Principles



Optimizing costs in Azure is a multifaceted endeavor that requires a strategic approach and a deep understanding of the available tools and features. By leveraging Azure's Hybrid Benefit for both Windows and Linux, making smart use of Reservations for various resources, adopting Savings Plans, and diligently managing Idle Resources, businesses can achieve substantial cost savings.


Additionally, the careful selection of SKUs, appropriate resizing of resources, thorough analysis of logs, and effective use of Workbooks and Dashboards can further enhance cost efficiency. Lastly, embracing FinOps principles ensures that cost management is not just an IT concern but a shared responsibility across the organization, aligning cloud spending with business value. Together, these strategies form a robust framework for achieving cost optimization in Azure, enabling businesses to maximize their cloud investments and drive greater efficiency and innovation.


As always, I hope this was informative to you and thanks for reading.



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