Understanding Azure savings plans for compute
Tags: azure, cost
Published: 2023-02-15 14:10:00

Saving money is a core objective for everyone.  Whether that is in your grocery shopping or your cloud spend. 

There are lots of tools and [best practices](https://learn.microsoft.com/azure/cloud-adoption-framework/govern/cost-management/best-practices#best-practices-by-team-and-accountability) that can be used to help you with costing and sizing your resources within the Azure cloud. 

In this post I want to concentrate on the [Azure savings plans for compute](https://learn.microsoft.com/azure/cost-management-billing/savings-plan/savings-plan-compute-overview) that was released in October. I will cover what the Azure savings plan for compute is, why it’s an important tool that can help you save money and explain any gotchas when using it. 

## What is Azure savings plans for compute?

In October 2022 Microsoft launch the Azure savings plans for compute.  These savings plans offer a flexible pricing plan that could save up to 65% from the pay as you go prices. 

With Azure savings plans for compute you commit to spending a fixed amount on compute services for one or three years.

If you are a Microsoft Customer Agreement (MCA) or [Cloud Solution Provider (CSP)](https://learn.microsoft.com/partner-center/csp-overview) customer, you will see the prices for savings plans in US Dollars. For those on [Enterprise Agreements (EA)](https://www.microsoft.com/licensing/licensing-programs/enterprise) they will see the plans in their local currency. 

You can choose to pay for the savings plan monthly or pay for it all up front. 

## What services are covered by Azure savings plans for compute?

The Azure savings plans for compute include compute service, in any Azure region.  That means you can use a savings plan to get a discount on: 
* Azure Virtual Machines
* Azure Dedicated Hosts
* Azure Container Instances
* Azure Functions premium plan
* Azure App Service

There are some things that are not included in the savings plans.

With virtual machines(VM) [ baremetal infrastructure](https://learn.microsoft.com/azure/baremetal-infrastructure/concepts-baremetal-infrastructure-overview), A, G and GS series are excluded. 

Savings plans are only applied to Azure Functions Premium Plans. 

And they are only relevant to [Premium v3](https://learn.microsoft.com/azure/app-service/app-service-configure-premium-tier) and[ Isolated v2 Azure App Services](https://learn.microsoft.com/azure/app-service/environment/intro).

## Why is Azure savings plans for compute important?

[Azure Reserved Instances (RI)](https://learn.microsoft.com/azure/cost-management-billing/reservations/save-compute-costs-reservations) are another create to help save money within your environment but they can be quite rigid as they are scoped to an Azure region and the type of service or VM size. 

With Azure savings plans for compute the scope is bigger.  You purchase a savings plan and it can be used for any relevant compute service within any region. 

The cost savings with Reserved Instances is greater than savings plans for compute but the flexibility that it offers can often balance out that cost savings. 

## Gotchas when using Azure savings plans for compute

Something to be aware of: you can’t cancel or get a refund on any savings plans.  Also when the savings plan is applied to Windows virtual machines and SQL databases the savings plan discount doesn’t apply to the operating system or software costs. 

## Conclusion

Azure savings plans for compute can play an integral part within your cost savings initiatives.  Combined with Azure Reserved Instances and following [Azure Advisor](https://learn.microsoft.com/azure/advisor/advisor-cost-recommendations) cost reductions you can significantly reduce costs.