Cloud Cost Management for SaaS Companies

Cloud cost creep doesn’t happen all at once; it builds up gradually, one resource at a time. New SaaS startups typically begin small, utilising a handful of Azure Functions, App Service plans, or perhaps SQL and Cosmos DB for data storage. Initially, this model is cost-effective with very low monthly charges.

However, as the business finds its product-market fit, onboarding more tenants leads to rapid scaling. This requires expanding regions for redundancy, setting up support resources for monitoring and alerts, creating multiple staging environments for disaster recovery tests, and integrating security layers for recovery objectives. All of these factors lead to a swift increase in Azure resources, resulting in a sizeable cloud bill.

For many SaaS teams, expense tracking often becomes a reactive practice rather than a proactive strategy for cloud cost management. This is particularly problematic when Azure spending begins to escalate rapidly.

When SaaS Expenses Go Awry

SaaS products hosted on Azure can scale at an astonishing rate. With every new customer, engagement within applications surges, making it increasingly challenging to link cloud spending to operational activities.

Here are some common challenges:

• Multitenant resources without clear visibility on spending per tenant—When multitenant architectures lack reporting capabilities, it’s nearly impossible to ascertain individual customer expenditure.
• Incremental service scaling—Services like Azure Monitor and Application Insights scale according to usage, but this often goes untracked.
• Event-driven architectures—Serverless setups and message-based services can lead to fluctuating traffic patterns. A sudden spike in activity due to seasonal work or promotional campaigns can greatly affect costs.
• Lack of correlation to business operations—Azure’s detailed invoices, while comprehensive, do not connect to real-world activities. For instance:
  • Event Hubs: £123
  • Storage: £305
  • Azure Functions: £417

Yet, these figures do not specify which tenant or functionality is causing the specific charges.

Read More: How to Calculate SaaS Customer Costs.

Azure Native Resources: Essential, Yet Lacking SaaS Transparency

Azure has fundamental tools for monitoring expenses, but they ultimately fall short for rapidly expanding SaaS products.

• Azure Cost Management + Budgets: Offers usage reports and budget controls. Useful for straightforward alerts, but it lacks detailed reporting by application or customer.
• Azure Advisor: Sends alerts regarding changes in SKUs or the removal of unused items. This is more applicable for IaaS than for SaaS that relies on PaaS.
• Azure Monitor + Logs: Excellent resource for usage metrics and troubleshooting, although it doesn’t automatically correlate costs upon setup.

If you’re operating a multitenant SaaS environment and find yourself asking:

• Which tenant is increasing costs?
• Which module is the most expensive?
• Where are we overspending?

Then Azure’s native features won’t provide the insights you need. However, Turbo360 will.

How Turbo360 Adds Context to Azure Costs for SaaS

Turbo360 equips engineering and DevOps teams with a contextual view of cloud activities in relation to an Azure-native SaaS product. Not only does this benefit finance teams in tracking costs, but it also integrates cost visibility into the engineering team’s perspective.

Tenant-Level Cost Grouping

While Azure resources are generally organised by subscription or resource group, Turbo360 allows teams to categorise their Azure expenses by tenant, as well as by application or business unit. This provides clear answers to questions like:

“What is Tenant A costing us across all services?”

Costs are displayed not only by service, but also in line with your product’s architecture.

Tag Governance

Tagging is one of the simplest methods to connect ownership with accountability. Yet, in multitenant environments, it’s rarely executed consistently. Turbo360 provides:

• The capability to view resources lacking tags.
• Monitoring options for a tag across multiple Azure resources, allowing for spend oversight and alerts if costs exceed budget.
• Tag-based assessments to ensure compliance with tagging policies without the need for manual audits.

Cost Conscious Alerts

Most teams utilise separate dashboards for observability and expenses. Turbo360 merges these tools, enabling you to explore spikes in Service Bus usage while instantly knowing the associated costs and which app or tenant caused them. This transforms monitoring from reactive to proactive.

Scaling Your SaaS on Azure? Integrate Cost Visibility from the Start

If you’re building an application intended to support numerous tenants today and potentially thousands tomorrow, you require a cost model that aligns with your design. Consider these strategies:

• Implement tagging from day one, incorporating tenant ID, environment, and service.
• Limit features per boundary or application layer concerning costs.

Additionally:

• Review your spending weekly, rather than waiting for finance to raise flags.
• If anticipating Azure invoices, make it a habit to refer to your Turbo360 dashboards detailing usage patterns.

Read More: Automating Cloud Cost Optimisation.

Conclusion

SaaS companies are inherently built for growth, yet this expansion does not automatically come with clear visibility of expenses. Although Azure’s built-in tools provide a basis for fundamental reporting, they fall short in revealing the reasons behind costs, the individuals responsible, and the overall context of your cloud invoices.

By integrating Turbo360, cost awareness becomes an embedded part of your operations. You transition from guesswork to observability, where every increase in expenditure is documented, every anomaly is flagged, and each client’s usage is transparently outlined. This not only exemplifies excellent engineering but promotes environmental sustainability within the SaaS ecosystem.