Reserved Instance or Azure Savings Plan — Which is Right for You?

Getting optimum performance from cloud services within your defined budget is what every business wants to have. You can choose between reserved instances and Azure Savings Plan. Which plan suits your business needs the best? Which plan reduces your operational costs the most? All such questions can be answered properly only if you are aware of the pros and cons of both. Let’s shed some light on the difference between Reserved Instance and Azure Savings Plan to make it easier for you to make a final decision for your cloud services.

What is Azure Savings Plan?

Azure Savings Plan allows you to pay an hourly rate for the next 1-3 years for the commute services. For example, you are using an hourly rate of $100 per hour for 10 of your virtual machines during one session. During the second session, if half of the virtual machines are deallocated, your total cost during this session would be $50 per hour. This is because half of the instances are inactive. Azure Savings Plan sets the base price for the minimal usage of resources and charges according to the Pay-as-you-Go model for all the active instances above the base usage.

Azure Savings Plan covers virtual machines, dedicated hosts, container instances, and Azure App Services. This plan does not roll forward the resources which are left unused.

Don’t worry if you are not sure about your hourly cloud needs. You can leverage the cost management section from the Azure portal to analyze your hourly cloud needs.

What are Azure Reserved Instances?

Azure Reserved Instances allow you to acquire a discount on VM compute services by pre-committing for the next 1-3 years. Businesses can save up to 72% of their compute costs by using Azure Reserved Instances. This discount does not cover networking, activity log storage, blob storage, and other cloud services.

Which One is Better for Your Business?

Both options are good for saving operational costs. Choosing the right plan depends on your business model and needs. Azure Reserved Instances are better for businesses with a stable and predictable workload. If you have a flexible workload, then Azure Savings Plan is the right option for you. Your business’s workload predictability and level of flexibility are the core aspects that define the right plan for you. It is a smart approach to assess your workload before making your final decision.