My 2 cents on Reserved Instance Savings – Part 2

My 2 cents on Reserved Instance Savings – Part 2

In my earlier blog I explained a bit on RI pricing to get you started. There is more to RI Usage and pricing and I will cover the other aspects in this blog.

Apart from the retail pricing, organization’s discounted pricing and RI pricing, another aspect that should be account for is the Azure Hybrid Benefit (AHUB) licensing. When using on-demand VMs you could always use the Bring Your Own License (BYOL) and get a discounted pricing for your VM. Essential MS no longer charges you for Windows Server license on the VM as you have deployed your own. This hence is a saving and not really a discount.

When using RI, same concept can be applied. When MS launched RI, they had initially thought of only Linux VMs and hence when you purchase a RI, you do not get to specify Linux or Windows. Following is the ‘Create Reserved VM Instances’ screen from Azure portal.

Create Reserved VM Instance

(click to enlarge)

As you can see, there is no option to select the OS for the VM. The important items on this screen are the Region and VM size (along with term and quantity), which help get the right RI price. You can create an RI which can be shared across subscriptions that belong to the same billing account, thus getting more flexibility in terms of the usage. The ‘estimated cost savings’ shown at the bottom of the screen, are based on the select RI price and its on-demand price, assuming 100% utilization for the selected term.

While I did mention above that RI purchased can be shared, but there are some restrictions as well and are pretty based on the parameters entered during the purchase (as per above screen). RI are restricted by region and the VM size i.e. they cannot be applied across different regions and are applicable to the same family of VM. If you create a VM with different properties (different region or different VM size), even if your RI is currently not in use, this new VM will get charged on standard on-demand (or organizational discounted) rates. You can get more information with regards VM Size sharing here.

The Azure portal, as we saw above didn’t show up anything on the OS, as it is an add-on onto the VM. If you decide to install Windows on it, you would get charged for Windows Server license and this will appear as a separate line item in your billing data. If you decide to use BYOL option, this additional line item will not appear in the billing, as no charges need be applied. To get an idea on the related license cost and saving you can make, you can use the Azure Price Calculator (see image below).

Azure Pricing Calculator

(click to enlarge)

In this screen, as you can see you get to select the OS and then towards bottom you can toggle the button (highlighted in red) to see additional savings if you use Azure Hybrid Benefit option. So even before you get to Azure portal to make the purchase, you can get a sense of price and the Windows Server License price as well.

RI purchase is possible for 1 or 3 years and it is but obvious that 3 year prices are lower as compared to 1 year prices. However there are other factors at play here like your organization’s discounted pricing or AHUB pricing etc. and your VM usage direction, which should all be considered before making the final choice for an RI.

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