The most common mistakes that increase Azure costs

This is the most costly error on our list. Azure Reserved Instances can reduce pay-as-you-go VM pricing by up to 72% with a three-year commitment, and approximately 40% for a one-year commitment. Azure Savings Plans offer up to 65% off for flexible compute commitments. Alarmingly, many production workloads—like databases, application servers, and domain controllers—operate on a pay-as-you-go basis indefinitely.

Typically, the justification is, “we’re uncertain if the workload is stable enough to commit.” In reality, any workload that has run unchanged for over three months is a strong candidate for reservations. Azure provides utilisation data that simplifies this evaluation.

Azure Advisor reviews CPU and memory usage over a week and highlights VMs operating well below their allocated capacity. In many environments, 20% to 40% of VMs fall into this category, often because they were sized for a peak load that never materialised or were designed for a workload that has since been reduced.

The issue is not a lack of recommendations; Advisor presents them clearly. The real concern is a failure to act on them. Rightsizing necessitates collaboration with application owners, a testing phase, and a responsible party to manage the change. Without a systematic process, the recommendations become outdated, and progress halts.

Development, testing, and staging environments that remain inactive from 6pm on Friday until 8am on Monday tend to be significant waste contributors on any Azure bill. A VM that operates throughout the weekend without activity can incur around 60 hours of unnecessary expense per week, amounting to over two full months of work hours annually.

Utilising Azure Automation’s Start/Stop VMs v2 tool can simplify the process of scheduling shutdowns. Additionally, combining this with dev/test subscription pricing—which offers considerable discounts on Windows VMs and SQL workloads for eligible subscriptions—can lead to savings exceeding 50% on non-production compute costs.

When a VM is deleted without removing its associated resources, it leaves behind orphaned elements: unattached managed disks, unassociated public IP addresses, and sometimes entire App Service Plans devoid of attached applications. These resources can easily go unnoticed as they typically don’t appear on many dashboards, but they continue to incur charges regardless of usage.

In environments experiencing active deployment (frequent shipping and infrastructure-as-code practices), orphaned resources can accumulate swiftly. It’s advisable to conduct a clean-up sweep at least quarterly; monthly would be even more effective.

Blob Storage pricing varies significantly depending on the tier. Hot storage is roughly 6–8 times more expensive per GB than the archive tier. Many organisations default to Hot when creating new storage accounts and neglect to revise the tier as data ages. For instance, log data from 18 months ago sitting in Hot Blob Storage, which hasn’t been accessed since, incurs premium costs without justification.

Azure Storage Lifecycle Management policies can automate transitions between tiers based on last-modified or last-accessed dates. Set these policies once, and the optimisation process will run continuously.

Data transfer from Azure to the internet incurs costs, as does data transfer between different Azure regions. Both are metered, and costs can catch unprepared teams off guard. Frequently, this occurs due to applications logging extensive telemetry to external endpoints, cross-region replication incorrectly set up, CDNs sourcing from geographically distant storage accounts, or backups replicating across regional boundaries unnecessarily.

Bandwidth charges appear under the “Bandwidth” or “Networking” category in Cost Analysis; they can easily be overlooked when reviewing by service. They deserve dedicated scrutiny.

While tagging doesn’t directly incur costs, inconsistent or missing tags exacerbate the impact of other mistakes on this list. When discrepancies arise and ownership of resources is unclear, the time taken to investigate doubles. When the finance department requests a cost breakdown by department and relevant data is unavailable, someone may spend time creating a spreadsheet instead. Rightsizing recommendations remain unaddressed due to the inability to assign ownership.

Azure does not automatically inherit tags from resource groups to individual resources. Unless enforced via Azure Policy, tags applied at the resource group level do not carry over, leaving many resources untagged.

Acquiring reservations without utilising them is an ironic method of overspending on Azure. If a reserved instance (RI) is tied to a VM family that is no longer in use, or if a savings plan is set at a spend level that exceeds actual consumption, the committed costs persist without providing benefits to other workloads.

This situation often arises when workloads change after reservations are purchased (e.g., VM family migrations, decommissioning of services), if RIs are limited to a specific subscription that later has its workloads shifted, or when savings plan commitments are set too ambitiously. Azure allows for refunds and exchanges up to $50,000/year within the same product family—a frequently overlooked option.

The Azure Hybrid Benefit allows organisations to use existing on-premises Windows Server, SQL Server, and Red Hat/SUSE Linux licenses for Azure VMs, drastically decreasing the software licensing portion of compute costs. When combined with Reserved Instances, total savings can reach 80% relative to pay-as-you-go.

This benefit is not automatically enabled; every eligible VM must have the Azure Hybrid Benefit manually activated. In environments transitioning from on-premises setups, it’s common to find numerous Windows VMs operating without this benefit, paying the full Windows Server licensing costs that could easily be offset by existing on-premises licenses.

In the absence of proactive budget alerts or anomaly detection, the feedback mechanism for Azure cost issues typically funnels through the Finance team. They notice an unexpected increase in the invoice and investigate, leading to the discovery of long-standing issues that have persisted for weeks. This is a flawed process—not because Finance is the wrong stakeholder, but because they are often the last to see the signs of trouble.

Configuring budget alerts in Azure Cost Management is free and can be completed in minutes. Anomaly detection alerts—also available at no cost—can highlight unusual spending behaviours before budget limits are reached. Both measures should be standard protocol in any Azure setup, yet they are often not activated by default.