Your Guide to Cloud Savings
Azure offers outstanding scalability and flexibility, yet it also harbours a significant risk: costs that can unexpectedly surge.
In contrast to traditional IT infrastructures, which demand meticulous planning and budget approvals, Azure services can be launched by any team member with just a few clicks. This ease of access can easily lead to runaway expenses. A minor development environment can escalate into thousands of pounds in unexpected costs that catch everyone off guard—an issue that many organisations are facing globally.
This is not just a hypothetical scenario. Statistics reveal the extent of the issue. According to Flexera’s 2025 State of the Cloud Report, companies are overspending on their cloud budgets by 17% and wasting 27% of their cloud expenses. Managing cloud costs has now surpassed even security as the primary challenge for IT teams, with 84% identifying it as their main concern. With predictions suggesting a 28% rise in cloud spending this year, the urgency to control expenses has never been clearer.
This underscores the necessity of Azure cost management. This guide aims to explore how to effectively manage Azure costs, including the advantages and common pitfalls of cost management, strategies to tackle cost challenges, the utilization of both native and third-party tools, and best practices to convert excessive spending into a strategic asset.
What is Azure Cost Management?
Azure Cost Management involves the monitoring, controlling, and optimising of your cloud expenditure to ensure that you receive the greatest return on your Azure investments. It encompasses the strategies and tools organisations employ to understand costs, align spending with business objectives, and eliminate unnecessary cloud expenditure.
Azure operates on a consumption-based model, meaning you pay only for what you use—whether that involves compute hours, storage capacity, service transactions, or network bandwidth. For example, running a virtual machine for 8 hours is less costly than running it for 24 hours, and premium storage incurs higher costs than standard storage. This flexibility necessitates careful oversight to avoid surprise costs.
Key Elements of Effective Cost Management:
- Visibility: Recognising current expenditure patterns and cost drivers
- Governance: Establishing policies to curb excessive spending
- Optimization: Tailoring resources, utilising reservations, and automating schedules
- Monitoring: Continuous tracking and processes for ongoing improvement
The aim is to foster a cost-aware culture where decisions made by technical teams take financial implications into account, ensuring that cloud expenditure delivers direct business value.
Benefits of Azure Cost Management
The true benefits of Azure cost management become apparent when you regard cloud spending not merely as a fixed expense but as a strategic instrument for business expansion. Organisations adept at cost management do more than save money—they free up resources for innovation and cultivate a financial discipline that evolves alongside their cloud journey.
Key Advantages:
- Comprehensive Cost Visibility: Acquire detailed insights into cloud spending across all Azure services and accounts, eliminating billing surprises and enabling informed decision-making.
- Cost Allocation by Department and Project: Effortlessly allocate and track expenses related to specific departments, projects, or initiatives, fostering improved accountability through accurate chargeback models.
- Resource Organisation with Cost Entities: Group resources into logical categories using cost entities, facilitating organisation and analysis of spending by business units or custom classifications relevant to your organisational structure.
- Tag-Based Cost Models: Craft intricate cost models that categorise resources based on tags assigned by teams, allowing for detailed tracking and optimisation opportunities.
- Budget Control and Alerts: Set budgets and automated notifications for projects, teams, or individuals to prevent overruns and maintain spending discipline throughout the organisation.
- Multi-Cloud Cost Management: Monitor and evaluate expenditure across various cloud providers, not just Azure, providing a cohesive view of your total cloud investment.
- Real-Time Cost Tracking: Gain continuous insight into resource usage and costs with automated reporting, ensuring you remain aware of your spending patterns at all times.
- Integration with Azure Advisor: Receive tailored recommendations for cost savings aligned with your actual usage patterns, helping you identify immediate optimisation possibilities.
Understanding Azure Cost Management Principles
You can’t optimise what you don’t comprehensively understand. While Azure’s pricing structure and cost management tools may seem clear-cut, the difference between basic usage and strategic cost control lies in mastering the finer details that many organisations tend to overlook.
These key principles will dictate whether you spend the upcoming year dealing with unexpected cost surprises or confidently manage your cloud budget.
How Does Azure’s Pricing Work?
Azure presents several pricing models tailored to meet various usage patterns and business requirements. Understanding these models is key to optimising your cloud expenses:
| Pricing Model | Cost Savings | Commitment | Key Characteristics | Best Use Cases |
| Pay-as-you-go | Highest unit cost | No upfront obligation |
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| Reserved Instances | Up to 70% savings | 1-3 years upfront commitment |
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| Spot Instances | Up to 90% savings | No commitment required |
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| Savings Plans | Flexible cost savings | 1-3 years commitment ($/hour) |
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Distinguishing Azure Cost Management from Azure Billing
While these tools are interconnected, they serve different purposes that can enhance your cost management approach:
Azure Billing
Azure Billing manages account administration, invoice generation, and payment processing. It oversees subscription management, billing profiles, and your monthly invoices.
Use Case: Use Azure Billing to manage payment methods, view billing history, or perform account-level administrative tasks.
Azure Cost Management
Azure Cost Management focuses on cost analysis, optimisation, and operational insight. It provides in-depth breakdowns of your expenditure, allows for budget creation and monitoring, and recommends ways to optimise costs.
Use Case: Use Azure Cost Management when you wish to analyse spending patterns, identify optimisation opportunities, or track costs against budgets.
Key Takeaway: Azure Billing informs you of your outstanding amount and processes payments, while Azure Cost Management clarifies why you owe that amount and how to improve your future spending.
Understanding Cost Entities, Scopes, and Hierarchy in Azure
Azure arranges cost data in a hierarchical format for detailed analysis and management:
| Hierarchy Level | Description | Scope | Key Use Cases |
| Management Groups | Top organisational level | Enterprise-wide visibility |
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| Subscriptions | Individual billing units | Subscription boundary |
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| Resource Groups | Logical containers within subscriptions | Project/application level |
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| Resources | Individual Azure services | Most granular level |
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| Cost Entities | Custom organisational units | Business structure alignment |
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How to Monitor and Optimise Azure Costs: Using Azure Native Tools
Whether you are tracking daily spikes, monthly trends, or yearly patterns, Azure allows you to pinpoint precisely where your money is being spent. The true value lies in identifying hidden optimisation opportunities that can transform your cloud expenses from a source of worry into a competitive edge.
The information below directly from Azure outlines how to calculate your Azure bill. Here are several tools you can utilise to optimise costs in Azure:
Azure Cost Management + Billing
Azure Cost Management + Billing serves as your primary platform for monitoring and analysing your Azure spending. It offers real-time cost tracking, historical analysis, and multi-cloud support for Azure, AWS, and Google Cloud environments.
Key Features: Facilities for cost allocation and chargeback, integration with Azure Advisor, API access for automation, and role-based access control for cost data.
Setup Steps: Access via the Azure portal, configure suitable scopes (subscription or resource group level), set cost allocation rules for organisation-wide chargeback, and enable detailed billing for in-depth analysis.
Limitations: Data updates happen daily instead of in real-time, historical data is restricted to 13 months for pay-as-you-go subscriptions, and some advanced features necessitate specific subscription types.
Azure Cost Analysis
Source: Microsoft Azure Cost Analysis
Cost Analysis serves as the analytical framework for recognising spending patterns through advanced filtering, grouping, and reporting options.
Advanced Filtering: Filter by time frames, specific services, resource groups, tags, or Azure regions to identify precise cost drivers and spending patterns.
Grouping Strategies: Group costs per service name for high-level insights, resource groups for project-specific tracking, and tags for business alignment or meters for detailed billing analysis.
Reporting Capabilities: Craft custom views for different stakeholders, share dashboards amongst teams, assess trends over time, and use built-in forecasting for budget planning.
Azure Budgets and Alerts
Azure Budgets empower proactive cost management through automated notifications and actions as spending nears defined limits.
Budget Types: Cost budgets monitor actual expenditure, usage budgets track resource consumption, and forecast budgets offer early warnings based on projected costs.
Alert Configuration: Set incremental thresholds (50%, 75%, 90%, 100%) with distinct notification groups, configure automated responses through webhooks or Azure Functions, and create action groups for escalation procedures.
Best Practices: Establish hierarchical budgets at subscription and resource group levels, align budgets with project timelines, and integrate alerts with existing IT service management or project management systems for comprehensive cost control.
Azure Pricing Calculator
The Azure Pricing Calculator facilitates pre-deployment cost estimation and workload planning through comprehensive modelling of Azure services and configurations. This web-based tool assists organisations in verifying architectural decisions and formulating accurate budget forecasts before resource deployment.
Key Features: Cost modelling for over 200 Azure services, scenario comparison features, Reserved Instance and Hybrid Benefit calculations, and export capabilities for budgeting purposes.
Setup Steps: Access via a web browser without needing an Azure account, select desired services and configurations, adjust parameters like region and performance tiers, and save estimates for team collaboration.
Limitations: Estimates reflect standard pricing rather than special enterprise agreements, assume consistent usage patterns, and do not integrate with actual usage data for validation.
Azure Advisor
Source: Microsoft Azure Advisor
Azure Advisor offers intelligent recommendations for cost optimisation, performance improvement, security, and operational excellence through continuous analysis of your Azure environment using machine learning algorithms.
Cost Optimisation Features: Identifies underutilised virtual machines with recommended rightsizing, suggests Reserved Instance purchases based on usage patterns, and recommends the removal of unused resources like unattached disks.
Implementation Steps: Advisor continuously monitors resource usage, generates daily updated recommendations with potential savings, and offers one-click execution for many suggestions.
Best Practices: Regularly check recommendations each week to ensure cost efficiency, focus on high-impact suggestions first, and integrate Advisor insights into existing change management processes for systemic optimisation.
Best Practices for Azure Cost Management
While using Azure, the total cost of your cloud computing expenses can vary based on your selected settings and services. There are several broad strategies to reduce Azure costs. For instance, a company may utilise resource tags, Azure’s native cost management features, and various payment options.
Here are some recommended best practices that can be applied across all Azure resource types.
Identify Unused Resources
It’s crucial to recognise that even if certain resources are idle, the associated costs still appear on your cloud services statement. Costs linked to underutilised storage can escalate quickly. Thus, organisations should routinely assess their cloud infrastructure to identify inactive resources that can be switched off promptly.
Rightsize Virtual Machines
Azure provides numerous options regarding VM storage and processing power. Businesses can review infrastructure usage and adapt based on daily demands, as this is a flexible platform. Regularly monitoring usage and ensuring the VM is downsized when possible is an effective method for lowering Azure expenses.
Select Suitable Payment Options
Azure presents various payment options:
- Pay-as-you-go: This option offers the highest flexibility but incurs the highest unit costs; it allows for on-demand scaling of infrastructure.
- Reserved Instances: Azure Reserved Instances can cut costs by up to 70% and are ideal for long-term workloads, requiring a 1-3 year upfront commitment.
- Spot Instances: Spot Instances utilise unused physical computing resources and can save up to 90% on costs. However, these are suited for non-urgent workloads since they may be stopped at any time.
Implement a Resource Tagging Strategy
A consistent approach to tagging enables accurate cost allocation to departments, projects, and cost centres. Essential tags should include cost centre, project name, environment, and owner. When executed properly, these tags facilitate the creation of detailed expenditure reports and enable precise chargeback models, all while preventing orphaned resources.
Utilise Azure Hybrid Benefit
Azure Hybrid Benefit allows for the utilisation of existing Windows Server and SQL Server licences in Azure, potentially reducing costs by 40% for Windows VMs and up to 55% for SQL Server. Organisations should audit their licenses to evaluate all possibilities for applying this considerable cost saving.
Optimise Storage with Tiering
Azure provides multiple storage tiers: Hot for frequently accessed data, Cool for infrequent access, and Archive for rarely accessed data. Establishing automated lifecycle policies can facilitate the movement of data between tiers based on access patterns, drastically reducing storage costs.
Automate Resource Scheduling
Set up automated start/stop schedules for non-production environments, along with auto-scaling for production workloads. Many organisations report that automating these processes can lead to 40-60% savings on development and testing environment expenses.
Establish Cost Governance
Utilise Azure Policy to create regulations that prevent the deployment of costly resources. You can restrict certain VM sizes, storage types, or regions in line with your cost optimisation objectives, ensuring that financial considerations are integrated into deployment methodologies.
Conduct Ongoing Cost Reviews
Effectively managing Azure costs requires continuous monitoring and regular review cycles. Set up monthly discussions to analyse expenditure trends, assess Azure Advisor recommendations, and uncover new optimisation opportunities.
Shift to Serverless Computing
Adopting serverless computing offers an additional avenue to minimise costs, available through various services in Azure. You are charged only when the code runs, making this an ideal solution for compute-heavy workloads that operate intermittently.
Common Pitfalls in Azure Cost Management (and Solutions)
Even when intentions are noble, organisations often fall into recognisable traps that significantly impact their Azure costs.
Here are some common pitfalls with corresponding solutions:
| Pitfall | Solution |
| Disregarding Non-Production Environments | Set automated start/stop schedules for dev/test environments, use Azure Dev/Test pricing, and create policies that default to standard storage and smaller VM sizes unless otherwise justified. |
| Over-Provisioning for Peak Loads | Design for baseline needs with enabled auto-scaling, leverage Azure Monitor metrics to adjust sizes based on actual usage, and consider spot instances for fluctuating workloads. |
| Neglecting Resource Lifecycle Management | Utilise mandatory expiration tags on temporary resources, establish regular cleanup schedules, and apply Azure Resource Manager policies to automatically remove resources beyond specified periods. |
| Misunderstanding Reservations Commitments | Begin with short-term reservations, analyse usage patterns for at least 3-6 months before committing, and maintain flexibility by securing reservations for resource families rather than specific sizes. |
| Lack of Cost Visibility and Attribution | Enforce essential tagging policies via Azure Policy, implement consistent naming conventions, and automate tag application through deployment templates and CI/CD pipelines. |
| Focusing Exclusively on Compute Costs | Carry out comprehensive cost analysis across all Azure services, optimise data transfer patterns, implement storage lifecycle strategies, and periodically review network configurations for efficiency. |
| Weak Governance and Approval Protocols | Use Azure Policy to restrict high-cost resource types, create approval workflows for significant deployments, and utilise role-based access control to limit who can deploy expensive services. |
When Azure’s Native Tools Fall Short: Opt for an Enterprise-Grade Solution
Though Azure’s native cost management tools offer foundational capabilities, numerous enterprises uncover significant limitations as they expand their cloud operations. The predominant challenge is multi-subscription complexity, where native tools inadequately provide unified reporting across myriad subscriptions, complicating the task of obtaining consolidated insights into spending patterns and optimisation prospects.
Moreover, organisations operating significant workloads across Azure, AWS, and Google Cloud platforms find Azure Cost Management lacks the necessary cross-cloud integration and holistic analytics they require.
The basic alerting and budgeting features often fall short of fulfilling advanced automation needs for dynamic resource optimisation and proactive cost control, while standard cost allocation functionalities may not meet intricate enterprise chargeback and showback requirements.
Lastly, the daily data refresh cycles of Azure restrict real-time monitoring and immediate response capabilities, which large-scale operations necessitate for efficient cost management.
This is where Turbo360 comes into play…
How to Cut Your Azure Costs with Turbo360
When these enterprise limitations hinder effective cost management, advanced third-party solutions like Turbo360 help bridge the gaps that native tools cannot address. Turbo360’s Cost Analyzer is an all-in-one integrated solution that provides a plethora of features to meet enterprise-scale demands.
Cost Analyzer offers unparalleled visibility into spending with profound Azure cost analysis spanning multiple Azure subscriptions, environments, and teams. Turbo360 also presents an actionable Azure cost estimation tool to maximise savings, optimise expenditures through better volume-based purchasing decisions, and eradicate waste.
Here are the benefits of using Turbo360:
Discover Cost Optimisation
Cost Optimisation within Cost Analyzer enables you to develop optimisation schedules linked to resources by defining tiers, throughput values, and the resource state according to operational hours of the week.
You can visualise expenditure across multiple subscriptions in one view and start monitoring cyclical cost trends and patterns with hyper customisation.
In-Depth Azure Cost Analysis Reports
Break down costs by subscription, region, tags, and resource groups for in-depth insights. Enterprises can achieve visibility at team and account levels and act swiftly on any indications of cost spikes in Azure.
Smart Alerts for Proactive Management
Budget monitoring aids you in adhering to set budgets by proactively overseeing Azure spending. Teams can also utilise ready-to-use cost trend dashboards for forecasting achievable budgets.
The calendar view provides a historic overview of alert status, identifying the precise date and time of cost spikes.
While Azure Cost Analysis has its benefits, it does exhibit some drawbacks. Azure limits the features to a single subscription level. Enterprises, which typically engage in numerous environments, may find this restriction unhelpful. Visualising multiple configurations under one platform would be a significant advantage for such users. Turbo360’s Cost Analyzer resolves these challenges, providing an enhanced option for effective cost monitoring and visualisation across Azure subscriptions.
Experience our Cost Analyzer feature with a 15-day trial version.
