Chapter 11: Azure Cost Planning and Management

In Chapter 10, Azure Privacy and Compliance, you learned about the skills that covered the Microsoft core tenets of security, privacy, and compliance.

This chapter will cover methods for planning and managing costs.

This chapter aims to provide coverage of the AZ-900 Azure Fundamentals Skills Measured section known as Describe Azure Cost Management.

By the end of this chapter, you will have the following skills:

• Be able to understand factors that impact the costs of resources and options for cost control and reduction
• Be able to understand Azure Cost Management
• Be able to understand the Azure Pricing calculator and the Total Cost of Ownership (TCO) calculator

To support your learning with some practical skills, we will cover some hands-on exercises while implementing the tools covered in this chapter.

The following exercises will be carried out:

• Exercise 1 – using the Azure Pricing calculator...

Technical requirements

To carry out the hands-on labs in this chapter, you will need the following:

• Access to an internet browser.
• A Microsoft account; you can use the same account that you have used for the other exercises in this book. If you do not have a Microsoft account, you can create a free account at https://account.microsoft.com/account.

Factors that affect costs

Each Azure consumption (usage)-based service has one or more usage meters that define the price rate and unit of cost. Depending on the service, there will be different units of costs.

Billing is performed monthly for each subscription based on resource consumption that's collected from individual meters for that subscription. This means that every month, you may receive a different invoice based on a different set of costs incurred; maybe you consumed more on one resources meter, less on another, and created new resources that created costs against another meter.

The following are primary factors that can affect costs:

• Purchasing model: The costs for resources may differ, depending on your purchase model. You can either purchase your Azure directly from Microsoft or through a Cloud Solution Provider (CSP): https://azure.microsoft.com/pricing/purchase-options.
• Resource type: The costs are specific to your resources; each resource has...

Reducing and controlling costs

The following are some of the ways we can reduce and control costs:

• Optimize resources: This is an operational activity. Its purpose is to identify any resources that are not used and can be deleted, any resources that can be right-sized onto more cost-optimal resource types or sizes, and identifying any resources that don't need to be running 24/7 and that could be shut down or paused to avoid costs. Any resources running on IaaS should be evaluated to see whether they can be moved to PaaS, serverless, or SaaS. Azure Advisor is an essential tool for this activity; tags should also be used to identify costs owners.
• Azure hybrid benefit: This is a licensing benefit and allows an organization to maximize any investment in existing on-premises Software Assurance (SA)-enabled Windows Server or SQL licenses (or eligible subscription-based licenses); this removes the need to license and pay with the Pay as You Go (PAYG) model. For a VM, this...

Azure Cost Management

Azure Cost Management is provided through a Cost Management + Billing dashboard functionality in the Azure portal; it provides core functionality such as cost visibility, optimizations, and accountability.

The following capabilities are provided within the Cost Management + Billing function within the Azure portal:

• Billing: View and download invoices; view payment methods and make payments.
• Cost Management: Perform cost analysis, set cost alerts, and create budgets.

The following screenshot shows the cost analysis screen in the Azure portal:

Figure 11.1 – Azure Cost Management

In this section, we looked at Azure Cost Management. In the next section, we will look at the Azure pricing calculator.

Azure Pricing calculator

The Azure Pricing calculator is a publicly accessible browser-based tool where you can estimate the cost of services that can be created in Azure.

All Azure resources that can be purchased are displayed in categories that can be browsed through. The calculator has a search function; each resource you can add as an item to the estimate has a hyperlink to the product details for each resource, as well as its pricing page. This is useful if you need to understand the pricing structure for each resource and any factors that may impact costs.

To use the calculator to provide cost estimations for your chosen solution, you must add the required services for your solution to the estimate. Then, you will see a total estimate and breakdown; you can set the currency and then export, save, or share the estimate. Note that the estimates are not intended to be used as actual quotes; the resource's availability, the pricing structure, and its costs may vary from...

TCO calculator

The TCO calculator can be accessed as a browser-based tool that can estimate cost savings by moving workloads to Azure. From here, you can generate a report that compares the costs of workloads running in on-premises environments with those running in Azure.

The TCO calculator allows you to enter details for the on-premises workloads. It will then provide some assumptions based on industry average operational costs, including data center facility costs, electricity, labor, hardware, software, and networking costs. It then provides potential costs savings by moving those workloads to Azure. These reports can be saved, downloaded, or shared.

The TCO calculator is shown in the following screenshot and can be accessed from https://azure.microsoft.com/pricing/tco/calculator:

Figure 11.3 – TCO calculator

In this section, we looked at the TCO calculator. In the next section, we will cover some hands-on exercises to help you build on the...

Hands-on exercises

To support your learning with some practical skills, we will look at the hands-on use of some of the tools covered in this chapter.

The following exercises will be carried out:

• Exercise 1 – using the Azure Pricing calculator
• Exercise 2 – using the TCO calculator

Getting started

To get started with these hands-on exercises, you will need the following:

• Access to an internet browser.
• A Microsoft account; you can use the same account that you have used for the other exercises in this book. If you do not have a Microsoft account, you can create a free account at https://account.microsoft.com/account.

Exercise 1 – using the Azure Pricing calculator

In this exercise, you will create a price estimate with the Azure Pricing calculator; the estimate will be for a simple single-instance Windows VM hosted in the North Europe (Dublin) region.

Task – accessing the Azure Pricing calculator

...

Summary

This chapter covered the AZ-900 Azure Fundamentals exam skills area known as Describe Azure Cost Management.

In this chapter, you learned about cost management and planning.

These skills will have provided you with the confidence to explain and discuss the functionality and usage of the following aspects with a business or technical audience: the factors that impact the cost of resources, such as regions and service types; cost control methods and options for cost optimization and reduction; cost insights and governance through Azure Cost Management; and using the Azure Pricing calculator to estimate resource costs and the TCO calculator to calculate the costs of moving workloads to Azure.

In the next chapter, we will cover Azure Service-Level Agreements (SLAs), including their purpose, identifying actions that can impact a SLA, and looking at service life cycles in Azure.

Further reading

This section provides links to additional exam information and study references:

• Exam AZ-900: Microsoft Azure fundamentals: https://docs.microsoft.com/learn/certifications/exams/az-900
• Exam AZ-900: skills outline: https://query.prod.cms.rt.microsoft.com/cms/api/am/binary/RE3VwUY
• Microsoft Learn: Azure Fundamentals – Describe Azure cost management and service-level agreements: https://docs.microsoft.com/learn/paths/az-900-describe-azure-cost-management-service-level-agreements

Skills check

Challenge yourself with what you have learned in this chapter:

1. What are five factors that can affect costs?
2. List examples of resources with no cost implications; that is, if removed, they would not reduce the monthly bill.
3. What are four ways to reduce and control costs?
4. What are the features of Azure Cost Management?
5. What is the difference between the Azure Pricing calculator and the TCO calculator?