10 Azure Cost Optimization Best Practices to Save in 2024

The Importance of Cloud Cost Optimization

When businesses first move to the cloud, they prioritize performance, reliability, and security. However, as your cloud usage grows, your cloud bills can grow quickly due to the ease of provisioning and the “always-on” nature of services. Over time, these unchecked expenses can drain resources that could be better allocated elsewhere within the organization. Leaving cloud costs unmanaged in the long run will make you pay for more than what you consume, causing financial strain on your business, and sometimes even causing potential security risks.

To tackle these challenges, implementing a cost optimization strategy is necessary. Here are some of the best strategies designed for optimizing costs within Microsoft Azure.

Best Strategies for Azure Cost Optimization

Azure offers multiple tools and strategies that can help organizations optimize their spending. Let’s walk through some of the proven strategies for Azure cost optimization and how to use them efficiently.

Use Azure Cost Management + Billing Tools

Azure Cost Optimization + Billing is a centralized platform that can track and analyze your cloud spending. It offers you insights into your usage patterns, identifies areas where costs can be reduced, and allows you to set budgets to control expenses. With this tool, teams can also allocate costs to specific projects, departments, or resources, allowing for more precise budgeting and financial planning.

The tool also enables the creation of custom views and reports, allowing teams to monitor costs in a way that aligns with their goals. Automating alerts and notifications, ensures you stay informed of spending thresholds in real time, preventing unexpected cost overruns.

Implement Azure Reserved Instances (RIs)

For long-term workloads with predictable usage, Azure Reserved Instances (RIs) can offer significant savings of up to 72% compared to pay-as-you-go pricing, making them a valuable strategy for Azure cost optimization. RIs allow you to commit to one or three-year plans, providing discounts for those willing to lock in for longer periods. By analyzing usage trends, you can identify which workloads would benefit most from RIs, ensuring you maximize savings without overcommitting.

Implementing Azure Reserved Instances (RIs) not only reduces costs but also brings predictability to budgeting, making it easier to forecast expenses. RIs are flexible too; if your needs change, Azure offers options to exchange or cancel reservations, providing some adaptability.

Auto-Shutdown of Idle Virtual Machines

Azure Virtual Machines (VMs) can run up costs when left idle, making them prime targets for Azure cost optimization strategies. Implementing auto-shutdown policies for idle VMs ensures you’re not paying for unused resources. Azure allows you to set automatic shutdown schedules to power off VMs during off-hours or low-activity periods, which is especially beneficial for non-production environments.

Azure provides flexibility to customize shutdown schedules, allowing you to customize them to specific workloads or departments. For even greater control, you can configure notifications to alert teams before the shutdown, ensuring any essential work can be saved or adjustments made beforehand.

Take Advantage of Azure Hybrid Benefit

The Azure Hybrid Benefit allows you to use your on-premises Windows Server or SQL Server licenses in Azure, effectively lowering the cost of Azure VMs. This benefit is particularly valuable for organizations with existing Microsoft licenses, as it can reduce overall costs by up to 85% when combined with reserved instance pricing.

As part of a broader Azure cost optimization strategy, the Azure Hybrid Benefit is an excellent option for businesses looking to scale their infrastructure in Azure without incurring additional licensing fees. Moreover, the benefit extends across multiple Azure services, including SQL Database, SQL Managed Instance, and Azure Dedicated Host, allowing flexibility in how you allocate your existing licenses to maximize savings across various workloads.

Utilize Azure Advisor for Cost Recommendations

Azure Advisor is a personalized cloud consultant that offers recommendations on cost, security, reliability, operational excellence, and performance. By analyzing your specific workloads and configurations, Azure Advisor can provide actionable insights for Azure cost optimization, such as underutilized resources that could be downgraded or de-allocated to save costs.

It also flags unused or idle resources, allowing you to eliminate unnecessary expenses effortlessly. Additionally, Advisor provides alerts for budget thresholds, so you can maintain better control over your cloud spending and optimize resource allocation continuously.

Add Azure Savings Plans for Compute for Dynamic Workload

Azure’s Savings Plans for Compute provides a flexible pricing model designed for dynamic workloads. Unlike RIs, which require a commitment to specific VM sizes, this plan allows for cost savings across various compute resources, ideal for workloads that may vary in size or require scalability. Savings Plans can help reduce costs for a wide range of services like VMs, Azure Kubernetes Service (AKS), and more.

With Azure Savings Plans for Compute, you can save up to 65% compared to pay-as-you-go pricing, making it a valuable option for businesses looking to optimize cloud spending. The plan’s flexibility allows you to apply savings across multiple VM series, enabling seamless cost control as your workload shifts. With the right Azure cost optimization strategies, organizations can enhance their financial management while ensuring that they meet their performance needs efficiently.

Choose the right Azure compute service

Selecting the right compute service based on workload requirements is essential for achieving Azure cost optimization. Azure offers a variety of options, from standard VMs to more specialized services like Azure App Service, Azure Functions, and Azure Container Instances. Assessing your workload needs and choosing the most efficient service can prevent over-provisioning and reduce unnecessary expenses.

Each Azure compute service is tailored for specific use cases: standard VMs are suited for general-purpose applications, while Azure App Service simplifies web app deployment with built-in scaling. For event-driven workloads, Azure Functions enables a serverless experience, charging only for active processing time. 

Set up budgets, and cost alerts and allocate costs to teams and projects

Setting budgets and cost alerts helps maintain visibility into cloud expenses. With Azure cost management tools, you can create budgets for specific projects, departments, or resources, allowing for more granular cost control. Alerts can be triggered when spending approaches predefined thresholds, enabling proactive management before overages occur.

Allocating costs to teams and projects allows for precise tracking, making it easier to assess the financial impact of each initiative and improve accountability. Azure’s tagging system further simplifies this process by categorizing resources based on project or team, giving a clear view of usage patterns.

Optimize Storage and Disk Usage

Storage costs can quickly accumulate, especially if inefficient practices are in place. Hence optimizing storage cost is a vital part of Azure Cost Optimization. Some ways to optimize Azure storage include:

• Tiering Storage: Using appropriate storage tiers based on access patterns. For example, archive storage is ideal for infrequently accessed data.
• Blob Lifecycle Management: Setting up rules to automatically move data to lower-cost storage tiers or delete it when no longer needed.
• Disk Size and Type: Selecting the right disk size and type for specific workloads to avoid unnecessary costs.

Implement Proper FinOps Strategies

FinOps, a financial management practice tailored for cloud environments, can help organizations control their cloud spending more effectively. Implementing FinOps involves collaboration between finance, technology, and business teams to create a cost-conscious culture. Regular reviews, budget allocations, and leveraging tools like Azure Cost Management make FinOps an integral part of cloud cost management.

FinOps promotes a proactive approach to cloud cost management by encouraging real-time visibility into spending and fostering collaborative decision-making. By focusing on Azure cost optimization through automated resource tagging and regular right-sizing, teams can reduce waste while meeting budget goals. This method offers organizations a clear picture of their usage patterns, ensuring cloud resources are utilized effectively and unnecessary expenses are minimized

How Economize Can Help in Azure Cost Optimization

Economize is a cloud cost management platform that provides advanced tools to manage and optimize Azure costs effectively. Here’s how it can support cost savings:

• Real-Time Monitoring: Economize offers real-time tracking of your Azure spending, ensuring you can react quickly to cost spikes.
• Smart Suggestions: By analyzing your Azure environment, Economize provides personalized recommendations on cost-saving opportunities, including idle resources, over-provisioned VMs, and low-utilization instances.
• Cross-Platform Integration: With support for multiple cloud providers, Economize can manage costs across hybrid cloud environments, making it an ideal choice for businesses using Azure alongside other cloud services.
• Automated Tagging and Allocation: Easily categorize and allocate costs to different teams and projects with automated tagging features.
• FinOps-Friendly Reports: With detailed reporting features, Economize aligns well with FinOps practices, offering transparent insights into resource allocation and budget adherence.

Conclusion

Azure cost Optimization is essential for businesses to fully leverage the cloud’s potential while staying within budget. By adopting strategies such as Azure Reserved Instances, Savings Plans, and efficient cost management tools for Azure, organizations can achieve significant savings. Implementing best practices like auto-shutdown policies and utilizing Azure’s hybrid benefits can help avoid unnecessary expenses. Additionally, platforms like Economize provide enhanced capabilities for cost optimization by offering real-time tracking, personalized recommendations, and seamless cost allocation across teams and projects. Together, these approaches empower businesses to make the most of their Azure investments.

Is Your Cloud Budget Overwhelming?

Struggling with high cloud bills? Don’t stress any longer. Economize offers a simple solution to cut your expenses by up to 30%. Sign up for a free demo today and experience firsthand how quick and easy it is to reduce your costs and lighten your financial load.