How much does Azure cost?
This is a question that virtually everyone has had when they started looking at the Microsoft Azure cloud offerings. The reason this question isn’t as straightforward as it seems to be is that the pricing model has changed dramatically compared to the legacy model of buying server and app licenses on your volume licensing program or individually.
You only pay for what you use.
With Microsoft Azure, and other cloud solutions, the pricing model is consumption-based. You pay for what you use across the board. Pricing is also completely À la carte when it comes to what you want to use, in terms of features.
If you want to implement a handful of websites, you pay just for the websites. If you want a full hybrid cloud solution with Microsoft Azure Infrastructure as a Service (IaaS) and a number of virtual servers and virtual private network (VPN) connections, then you pay for just that. This model is completely different than past legacy licensing models and can result in dramatic cost savings, if approached thoughtfully.
The Microsoft Azure website has a number of tools and pages to help you estimate your total cost for an Azure implementation. The calculator can be found here
Funds in Azure are used the same way for every service and option. An example would be:
You have $2,000 on a credit card, or committed to Azure via an Enterprise Agreement (EA). (See buying options below for more information.) That $2,000 will be used to pay for storage consumption, network traffic, virtual machine (VM) run-time, website uptime and other auxiliary costs. Everything comes from the same bucket.
What about software licenses?
Software licenses, client access licenses, server application licenses are all included with the pricing of the servers or websites you operate in Azure. If you implement a Microsoft SQL server in a virtual machine, using the preconfigured virtual machine image in Azure, all SQL costs associated to that instance are included in your hourly fee for that virtual server. This includes client access licenses. For more information on this, please review the Linux Virtual Machines Pricing
How do I know what I need in Azure?
That is also an excellent question we often hear from new Azure customers. The reason this is a common question is comparing your on-premises solutions and environment to Azure is not a 1:1 comparison – in most cases. Microsoft has launched a cost estimator tool for IaaS implementations (virtual machines, virtual networks, storage, etc.). This is called the Microsoft Azure IaaS Cost Estimator Tool.
This tool will audit current on-premises virtual and physical servers. With the results, it will give you an estimate of what it would cost to take the selected resources you want to move into Microsoft Azure and give you what the estimated monthly cost will be. This is useful if you are migrating existing virtual or physical workloads to Azure, or know your current systems are close to what your new environment in Azure will represent. The first report will show you the data gathered and the sizing of the machines it identified.
The second report will show you the actual cost estimates per month, with options being pricing models based on performance, VM size equivalent or cost:
What about PaaS cost estimates?
The above scenario and cost estimator covers just the IaaS roles in Microsoft Azure. This includes virtual machines, storage and network traffic. The reason there is an easy-to-use tool for those scenarios is that on-premises servers operate very similar to virtual instances in Azure.
For Platform as a Service (PaaS) instances like Azure Websites, Azure SQL, Machine Learning and App Services, there is no analogue in most on-premises data centers. The best way to understand potential pricing around PaaS services in Azure is to review the pricing overview and then use the calculator referenced earlier in this blog post.
Now that I know what Azure could cost, what options are there for buying it?
There are currently three ways to purchase Microsoft Azure; each has its pros and cons. Let’s break them down:
1. Pay as you go: (only available via the Microsoft Azure website)
The cost model in the tool above, and on the calculator in the Microsoft Azure website, is based on the “pay-as-you-go” pricing structure. This is the most expensive way to purchase Microsoft Azure. With this model, you use a credit card and pay monthly for usage. There are limited discounts available for this pricing model. The pricing in the calculators will align closely with what your final pricing will be.
- Easy to setup, just need a credit card
- Only pay for what you use, no commitment
- Very flexible
- Most expensive way to pay for Azure
- If your credit card expires, or declines for whatever reason, your Azure account may be suspended. This will result in all public IPs being released and all of your workloads in Azure being suspended and deactivated.
- No licensing team integration or engagement from partners or Microsoft
2. Microsoft Open Value Volume Licensing: (only available from a Microsoft Licensing Partner)
This model of licensing Azure is handled differently from the pay-as-you-go model, as you can purchase “tokens” for Azure through your Microsoft licensing partners. These tokens are good for $100 of Microsoft Azure consumption. The tokens are purchased ahead of time and applied toward your Microsoft Azure account. There are no specific discounts.
Most customers looking to purchase Microsoft Azure for deployments would be better served with an Enterprise Agreement. This is due to the built-in discounts they offer and the fact that if you use more than $100/month in Azure funds, you qualify for an Enterprise Agreement.
- Work with your existing Microsoft Licensing partner
- Minimal commitment up front, can be purchased in blocks of $100
- Good for initial testing of Microsoft Azure with minimal commitment
- Can be converted to an EA agreement-based subscription down the road
- No credit card needed
- No discounts over the pay-as-you-go model
- Quickly can become more expensive than going to an Enterprise Agreement
- If your account exhausts all the funds from your token purchases, your Azure account may be suspended. This can result in all public IPs being released and all of your workloads in Azure being suspended and deactivated.
3. Microsoft Enterprise Agreements: (only available from a Microsoft licensing partner)
This is by far the most efficient and easy way to purchase Microsoft Azure. The minimum required for an agreement like this is a $1,200/yr. commitment ($100/mo. in Azure consumption). This is easily added to any existing Enterprise Agreement and also brings with it a number of advantages not available to the other purchasing models. This includes discounts on certain Azure features, up to 20%. Final discount pricing is based on EA level and varies per service.
Another large perk is that you get access to services in Azure that you are not able to use otherwise. These services include Active Directory Premium, Azure RMS, multi-factor authentication, etc.
With an EA commitment for Microsoft Azure, you pre-allocate what you believe you will use in Azure over the course of 12 months. If you use more than that commitment, you will either be asked to pay the difference at the end of the year, or quarterly if you go over the commitment by more than 150%. A detraction to this model is that any funds you leave unused at the end of the 12 month period are lost and a new commitment is started for the next 12 months.
- Low bar for entry – $100/mo. worth of Azure commitment for 12 months
- Very flexible: if you use more than your commitment, your subscription will continue to operate
- You are able to implement multiple subscriptions off of one EA commitment, making it easy for Test/Dev/Prod environments from one bucket of funds
- Discounts of up to 20% for certain features
- Ability to work with your existing Microsoft Licensing partner relationship
- Access to services in Microsoft Azure that would not be available otherwise
- Easy configuration of billing administration and management vs technical management and subscription management in Azure via the Enterprise Portal
- No credit card needed
- Funds left in the Azure commitment at the end of 12 months are forfeited and lost at the end of that period
- This does require some awareness and estimates of usage in Azure over the next 12 months
- Initial commitment may be prohibitive for initial testing or research of Microsoft Azure services. It is recommended to use a trial subscription, first
What if I am not ready to spend money but want to see what Microsoft Azure can do for me?
Microsoft offers a $200 credit free trial of Microsoft Azure for all customers. It is a 30 day and $200 trial credit that will let you kick the tires on anything you want in Microsoft Azure. This does require a credit card at sign up to verify you are a real person, but nothing is billed. Your usage of Azure is billed against that $200 credit at the full pay-as-you-go rates.
You can convert your trial account to a pay-as-you-go account, or to an EA agreement, at any time. To convert a trial into an EA agreement-based subscription, work with your Microsoft Licensing partner. Sign up for an Azure free trial today.