Microsoft Azure Savings Plans


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This new way of paying for Microsoft Azure was announced at Microsoft Ignite 2022 and seems to bear more than a passing resemblance to Amazon AWS Savings Plans. The similarities are probably a bonus for customers, meaning you don’t have to learn 2 totally different IaaS cloud payment options.

What is it?

Azure Savings Plans is, to some degree, the next step beyond Reserved Instances (RI). This new offering comes with a spend commitment on an hourly basis (over 1 or 3 years) and gives discounts over the PAYG pricing on resources where you have consistent usage. Eligible compute services include:

  • Virtual Machines
  • Dedicated Hosts
  • Containers
  • Azure premium functions
  • Azure app services

How it works

Savings Plans discounts are applied automatically (starting where the largest discount exists) to any eligible services on spend up to the hourly commitment i.e. £7 per hour. Any spend over that amount is then charged at PAYG pricing so, just as with Reserved Instances, accurate understanding of current and future usage is a must.

They only apply to infrastructure costs but can be combined with Azure Hybrid Benefits for Windows Server & SQL Server etc.

How to buy

Savings Plans are available for Enterprise Agreements, Microsoft Customer Agreements (MCA), and Microsoft Partner Agreements.

Enterprise Agreements

  • EA admins with write permissions can directly purchase savings plans from Cost Management + Billing > Savings plan. No specific permission for a subscription is needed.
  • Subscription owners for one of the subscriptions in the EA enrollment can purchase savings plans from Home > Savings plan.
  • Enterprise Agreement (EA) customers can limit purchases to EA admins only by disabling the Add Savings Plan option in the Azure portal. Navigate to the Policies menu to change settings.
  • Notifications are sent to EA administrators and EA notification contacts.
  • Users added to a savings plan using Azure RBAC (IAM) permission don’t receive any email notifications.

Microsoft Customer Agreements

  • Customers with billing profile contributor permissions and above can purchase savings plans from Cost Management + Billing > Savings plan experience. No specific permissions on a subscription needed.
  • Subscription owners for one of the subscriptions in the billing profile can purchase savings plans from Home > Savings plan.
  • To disallow savings plan purchases on a billing profile, billing profile contributors can navigate to the Policies menu under the billing profile and adjust Azure Savings Plan option.

Microsoft Partner Agreements

Partners can use Home > Savings plan in the Azure portal to purchase savings plans for their customers.

Savings Plans can be paid for upfront or on a monthly basis, and you don’t pay any more for choosing to spread payments. That said, monthly prices may vary on MCA due to impact of exchange rates.

If you currently have Azure Reserved Instances but would like to move to Savings Plans, you’re in luck – you can trade in Reservations for Savings Plans. The hourly commitment of the new savings plan must be greater than the leftover payments that are cancelled for the returned reservations. That said, not all reservations can be traded – those not eligible are:

  • Azure Databricks reserved capacity
  • Synapse Analytics Pre-purchase plan
  • Azure VMware solution by CloudSimple
  • Azure Red Hat Open Shift
  • Red Hat plans
  • SUSE Linux plans

Beware – Savings Plans cannot be cancelled, exchanged, or refunded. Automatic renewal of Savings Plans isn’t on by default but can be activated if you so wish.

Setting the scope

You can set the scope of Savings Plans to restrict where the savings can be applied. Your options are:

  • Shared
  • Single subscription
  • Management group
  • Single resource group

Reporting

Microsoft have provided information to help with reporting and cost analysis including how to identify wasted spend and how to access the CSV files here.

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Further Reading

Microsoft announcement

Azure Savings Plans document hub

Manage Savings Plans

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