Detailed Guide to Azure Virtual Machine Pricing

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Are you looking for the best price for your cloud investment? Like other organizations, you also want to move your entire workload to the cloud but need help to get budget-friendly services. The solution is right here. You must have heard of the leading virtual cloud service, Microsoft Azure. The platform offers different types of virtual machines at fair prices. 

About Azure Virtual Machine 

The cloud computing platform Microsoft Azure offers scalable and flexible virtual machines that can run multiple applications in the cloud. Users can easily deploy and manage virtual instances of hardware such as OS, networking, storage components, etc. 

It provides customized computing services to fulfill requirements. Azure VMs are helpful for building an application from scratch and expanding its on-premise infrastructure. They also help manage ongoing traffic for running applications by handling the workload efficiently.

Explore Different Varieties of Azure Virtual Machines

A variety of VMs are available at Azure that are designed to handle different workloads. Such as:

General Purpose

A general-purpose virtual machine is perfect for developing and testing low-traffic servers. It balances the CPU-to-memory ratios to operate multiple applications and is suitable for small to medium databases. This VM helps deal with a workload that typically remains idle most of the time but can burst to a high-performance level.

Compute Optimized

The compute-optimized virtual machine works ideally for medium-scale traffic load on web, application, and network servers by providing intensive CPU-to-memory ratios. It can handle workloads that require massive processing power, such as gaming, batch operations, web-based servers, etc.

Memory Optimized

Get a higher memory-to-CPU ratio by using the memory-optimized virtual machine. It suits medium to large caches, in-memory analytics, and relational database servers. It can handle high memory-intensive workloads, i.e., in-memory applications. This VM is perfect for managing data warehousing and massive databases.

Storage Optimized

This type of virtual machine by Azure is designed to handle input-output operations and high disk throughput. Storage-optimized VMs can operate databases with better throughput and low latency. It can handle high IOPS capacity per second.


High-end GPUs in this VM are useful for editing videos and rendering heavy graphics. It is further classified into three series categories, i.e., NC, NV, and ND. These series are designed for multiple operations and handling different workloads.

Different Pricing Components

  1. Cost of Compute: The cost charged for computing resources per second or hour. The price of a VM may vary depending on its type and size. Before buying any cloud service, you should check the operating system and region.  
  2. Cost of Storage: The price for the storage used by the virtual machine has separate charges because the VM generates the compute expenses by itself. There are several options on Azure, such as standard SSD and HDD, premium SSD, etc., at different prices.  
  3. Cost of Networking: The cost of transferring data by using Azure data centers is completely free. However, there are charges for moving outbound data to the internet, depending on its volume. You can also use other services like traffic manager, load balancer, VPN gateway, etc., with extra cost.  
  4. Extra Services: Apart from storage and networking, Azure offers additional services that are helpful for backup and app monitoring. Such services are site recovery, log analytics, and Azure monitoring.  

Pricing Models by Azure


In the case of a random or unpredictable workload, you can go with this model. The pricing is set to provide computing resources that are charged per second. There is no long-term commitment and upfront costs included in the pricing.

It is perfect to choose this model if your application runs inconsistently. This model is scalable, economical, and diverse. It is easy to calculate the precise cost using the calculator tool in a second. However, it is difficult to monitor constantly to prevent unexpected charges. In the long term, it can be more expensive than other models.

Reserved Instances

You can consider the reserve instances model if you want to reserve one or more virtual machines for a limited period. In exchange, you can get a massive discount that you won't get in the pay-as-you-go model.

If your workload is predictable, go with this pricing model. It is a cost-effective and flexible model that can be used long-term due to budget predictability and constraints. However, you must commit to fixed terms that may not suit your business requirements.  

Spot Virtual Machines

You can take advantage of Azure's unused capacity at a great discount. If you do not need resources at some point, it will automatically deallocate its capacity to the place where it is required. This model is perfect for interruptible workloads like testing, rendering, or batch jobs. The major advantage of getting this model is its low price.

It is easy to customize the budget depending on the project requirements. By predicting the price, you can control your unnecessary expenses and handle the workload by interrupting and resuming. However, you must plan and monitor the instances because the development process is complex.

Dev/Test Pricing

You can opt for this model if you need cloud service to manage the development and testing workload. You can save money for non-production environments by getting it at a special price. There is no additional cost of software already running on the virtual machine.

You can also access a variety of VMs and choose the one you need. While enjoying the discounts, you can maximize your cloud investment whenever required. It is well-integrated with GitHub and Visual Studio to support the development and testing operations.  

Azure Virtual Machine Pricing Comparison with AWS and Google Cloud

FeatureAzure VMAWS EC2Google Cloud VM
Pricing ModelPay-as-you-go, Reserved, SpotOn-Demand, Reserved, SpotOn-Demand, Committed Use, Preemptible
Basic Instance (Linux)$0.011/hour (B1s)$0.0116/hour (t4g.nano)$0.0075/hour (f1-micro)
Standard Instance (Linux)$0.08/hour (D2s v4)$0.0864/hour (t3.medium)$0.0825/hour (n1-standard-1)
High-Performance Instance$2.00/hour (H16r)$1.824/hour (c6gn.16xlarge)$1.760/hour (n2-highmem-32)
Storage Costs$0.05/GB/month (Standard HDD)$0.10/GB/month (EBS General Purpose SSD)$0.04/GB/month (Standard HDD)
Network Costs$0.087/GB (Data Transfer Out)$0.09/GB (Data Transfer Out)$0.12/GB (Data Transfer Out)
Free Tier12 months, 750 hours/month (B1s)12 months, 750 hours/month (t2.micro)12 months, 720 hours/month (f1-micro)

Ways to Optimize Virtual Machine Costs

  1. Right Sizing of Resources: Choose the right-sized virtual machine for your workload requirements. Azure offers different tools that help you analyze VM usage and suggest better options.
  2. Auto-scaling: By setting the auto-scaling mode, you can adjust the number of virtual machines dynamically required on demand. You will pay for what you are using. Configure certain metrics, like memory usage, storage, CPU, etc., to adjust your requirements.
  3. Tracking and Management: Azure's cost management and advisor tools help monitor usage and suggest ways to save money. After analyzing resources and other cost anomalies, you can optimize your expenses.
  4. Leverage Discounts: Consider using Azure's hybrid benefit, which allows you to use existing licenses of Windows and SQL servers. Customers can also save money by using ongoing assurance contracts.

Tools for Managing Virtual Machine Costs

  1. Cost Analysis: Depending on your requirement, you can pick Azure resources to purchase and get the cost details by using this tool. It is easy to customize the cost by filtering different metrics like resource types, time, scope, etc.
  2. Advisor: Optimize your prices by using actionable insights from the Advisor tool. This tool analyzes several Azure configurations and gives recommendations regarding security, availability, costs, and performance.
  3. Pricing Calculator: To estimate the price of Azure services that you want to purchase, you can use the pricing calculator. Customize your settings and pick all the necessary resources. This calculator will give you the cost estimate.  
  4. Budgets: If you are unsure about the budget for incurring cloud services, use the budget tool. Set the limit and get alerts whenever your budget exceeds the threshold point.  

How much does a VM license cost?

ProviderOperating SystemLicense Cost
AzureWindows Server$0.046/hour (D2s_v3)
AWSWindows Server$0.048/hour (t3.medium)
Google CloudWindows Server$0.046/hour (n1-standard-1)
AzureRed Hat Enterprise Linux$0.06/hour (D2s_v3)
AWSRed Hat Enterprise Linux$0.06/hour (t3.medium)
Google CloudRed Hat Enterprise Linux$0.06/hour (n1-standard-1)

How much cheaper is Azure than AWS?

Instance TypeAzure Price (per hour)AWS Price (per hour)Difference
Basic (Linux)$0.011 (B1s)$0.0116 (t4g.nano)Azure is 5% cheaper
Standard (Linux)$0.08 (D2s_v4)$0.0864 (t3.medium)Azure is 7.4% cheaper
High-Performance$2.00 (H16r)$1.824 (c6gn.16xlarge)AWS is 8.8% cheaper
Storage (GB/month)$0.05 (Standard HDD)$0.10 (EBS GP SSD)Azure is 50% cheaper
Data Transfer (GB)$0.087 (Out)$0.09 (Out)AWS is 3.5% cheaper

How do I reduce the cost of Azure VM?

Reserved InstancesCommit to 1- or 3-year terms for discounts compared to pay-as-you-go pricing.
Spot VMsUse spot pricing for workloads that can tolerate interruptions, saving up to 90% on costs.
Right-sizingChoose the appropriate VM size based on your actual usage to avoid over-provisioning.
Auto-shutdown Auto-shutdown for VMs that are not required 24/7.
Azure Hybrid BenefitUse your on-premises Windows Server or SQL Server licenses with Software Assurance to save costs.
Use Azure Dev/Test PricingGet discounts for non-production workloads like development and testing environments.
Storage OptimizationUse Standard HDDs or Azure Blob Storage for less critical data.
Monitor and OptimizeRegularly monitor usage and optimize resources with Azure Cost Management and Optimization tools.

Final Thoughts

Before buying a virtual machine from Azure, it is important to understand different pricing models that can effectively handle your cloud costs. After knowing everything about VM types, components, and pricing models, you can decide the best plan that fits your budget and matches your workload requirements.

Use cost management and calculating tools to optimize your expenses. Make sure that the service you buy manages your cloud infrastructure efficiently and is scalable at the same time. Now, decide what virtual machine you need and how much you can spend on your cloud investment. 

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