Describe Azure Management and Governance · Topic 1 of 4

Cost Management in Azure

AZ-900 cost management: what affects Azure costs, the pricing calculator, Microsoft Cost Management, cost analysis, budgets and alerts, and tags.

  • 5 min
In a nutshell
  • Region, resource type, consumption and outbound data transfer all affect cost.
  • The pricing calculator estimates the cost of planned resources before deployment.
  • Cost analysis shows actual spend and can group it by tag, resource or service.

What it is

Cloud costs vary with use, so you need ways to predict them before you deploy and to watch them afterward. This topic covers what drives cost, the tool that estimates it, the tools that track and limit it, and the tags that label it.

Before deployingestimatePricing calculatorforecast the billAfter deployingtrackCost Managementanalyse and alert

How it works

What affects costs

Several factors change an Azure bill.

  • Resource type and size: a larger virtual machine costs more than a small one, and each service has its own meters.
  • Consumption: you pay for the time, storage or operations you use.
  • Region: the same resource can cost different amounts in different regions.
  • Network traffic: data coming into Azure is generally free, while data going out to the internet or between regions is charged.
  • Subscription type and licensing: the offer you buy under, and whether you reuse existing licences, can change the price.
  • Purchase options: reserved capacity and savings plans give discounts for commitment, while spot offers discounts on spare capacity.

The pricing calculator

The pricing calculator estimates the cost of Azure services before you deploy anything. You choose services, a region, a size and a quantity, and it shows a monthly estimate that you can save, share or export.

Use it to plan. It does not show what you have already spent. Older study material also lists the Total Cost of Ownership calculator, which compares on premises costs with Azure, but the current outline names only the pricing calculator.

Microsoft Cost Management

Microsoft Cost Management is the built in set of tools for tracking and controlling spend once resources exist.

  • Cost analysis shows what you have spent, which you can group by resource, resource group, tag or service.
  • Budgets set a spending threshold and send alerts when actual or forecast spend approaches it. A budget alerts you but does not stop or delete resources.
  • Recommendations point to savings such as resizing or removing idle resources. They come from Azure Advisor.

Tags

A tag is a name and value pair you attach to a resource, resource group or subscription, for example Department and Finance. Tags organise resources and let cost analysis group spend by department, project or environment.

Resources do not automatically inherit the tags of their resource group. Azure Policy can be used to apply or require tags.

Resourcevirtual machinetaggedTagDepartment equals Financeused byCost analysisspend by department

Ways to lower an Azure bill

OptionHow it saves
Reserved capacityA discount for committing to one or three years
Azure Hybrid BenefitReuse of your own Windows Server or SQL Server licenses
Spot virtual machinesSpare capacity at a deep discount for work that can stop
Right-sizingMoving to a smaller size when a resource is underused
Shutting down idle resourcesNo charge for compute while a virtual machine is deallocated

Azure Advisor points out the right-sizing and idle-resource savings for you.

Using the pricing calculator

To estimate a project, you add each service to the calculator, choose its region, size and number, and set how long it runs each month. The calculator adds the lines into a monthly total that you can save, share or export.

Prices change by region and by option, so compare a few before deciding. The result is an estimate, not a bill.

Cost analysis and tags together

If every resource carries a Department tag, cost analysis can group spending by department. This answers questions such as which team spent the most last month.

TagValueQuestion it answers
DepartmentFinanceHow much did Finance spend?
EnvironmentTestHow much do test environments cost?
ProjectWebsiteWhat does the website project cost?

Tags only help if every resource is tagged. Azure Policy can require a tag on new resources.

How the exam asks about this

  • "Which tool estimates the cost before you deploy?" The pricing calculator.
  • "Which tool shows what you have already spent?" Cost analysis in Microsoft Cost Management.
  • "Which feature sends an email when spending reaches a limit?" A budget with an alert.
  • Remember that a budget never stops resources. Options that say it will are wrong.

What to remember for the exam

  • Region, resource type, consumption and outbound data transfer all affect cost.
  • The pricing calculator estimates the cost of planned resources before deployment.
  • Cost analysis shows actual spend and can group it by tag, resource or service.
  • Budgets send alerts at thresholds but do not stop spending.
  • Tags are name and value pairs used to organise resources and allocate cost.
  • Reservations and savings plans lower the price in return for a commitment.
Exam tip

"Estimate before you deploy" points to the pricing calculator. "See what we have spent" points to cost analysis.

Common mistakes

Expecting a budget to stop spending. A budget only alerts. It does not shut anything down.

Using the pricing calculator to see current spend. It estimates future cost. Cost analysis shows actual cost.

Assuming tags are inherited. A tag on a resource group does not automatically apply to its resources.

Forgetting outbound data charges. Data into Azure is generally free, but data out is not.

Watch out

Setting a budget is not the same as setting a spending cap. Resources keep running and billing after an alert fires.

Check yourself

  • Which tool estimates the cost of Azure services before you deploy them?

    The Azure pricing calculator.

  • Does an Azure budget stop resources when the limit is reached?

    No, it only sends alerts.

  • What is a tag?

    A name and value pair attached to a resource to organise it and allocate cost.

Topic 1 of 4 in Describe Azure Management and Governance

Test yourself on Describe Azure Management and Governance

The full Microsoft AZ-900 question bank has 500 questions, with timed practice exams and an explanation for every answer.

This study guide is independent and is not affiliated with, endorsed by, or sponsored by Microsoft. Vendor names, certification names and exam codes are trademarks of their respective owners and are used for identification only.