Cloud Cost Management: Azure Cost Optimization Best Practices

Written By

Rodolfo Ortega

Cloud technologies like AWS and Microsoft Azure have been constantly evolving and becoming accessible to a wider audience. Migrating to a Cloud platform may just be the best decision you can take for your company. The perks include a high-performing, scalable, and secure environment for Developing, Testing, and Deploying high-performing applications.

However, organizations venturing into Cloud computing for the first time, may not fully be well-versed with its workings. Chances are you’ll be experimenting with every available resource and, as a result, may end up spending much more than anticipated. The Flexera State of Cloud 2023 report found that one-third of all Cloud spending goes to waste.

This article is focused on providing in-depth insights about Cloud cost management on Azure by outlining some of the top cost optimization best practices you can implement to streamline expenses in your organization.

Table of Contents

What is Azure

Risks associated with ineffective Cloud cost management

Indicators of high Cloud costs

Top 6 Azure cost optimization best practices


Azure logo icon

What is Azure? 

Azure is Microsoft's public Cloud computing offering that comes with a wide range of Cloud services such as computing, analytics, storage, and networking. 

Businesses can take advantage of these services to build and scale new applications or run existing applications in the public Cloud.

Risks Associated with Ineffective Cloud Cost Management

Growing organizations are often operating under tight budgets, which means the slightest financial mishap can be devastating. Understanding financial outflows is critical to sustaining a business which is why it’s important to highlight the cost risks associated with your Azure Cloud infrastructure.

At a glance, Cloud infrastructure seems cheap. But, the reality is that this is only true if your Cloud resources are utilized appropriately. Even though many of the Cloud service providers, including Azure,  work on the pay-as-you-go (PAYG) model, the costs can stack up quite significantly with ineffective cloud cost management. 

For example, accidentally leaving a virtual machine (VM) active over the weekend would incur costs for over 48 hours of usage. Such mistakes can easily incur unnecessary expenses worth thousands of dollars.

Furthermore, most Cloud service costs are subtle, which can prove challenging to pinpoint where the expenditure lies, especially for beginners. According to the 2022 State of Cloud Costs report, only 3 out of 10 companies know where their Cloud costs are going.

Consequently, exposure to such risks can impact a company's ROI and profit margins, hindering growth in the long term.

Indicators of High Cloud Costs 

A few indicators can help you identify when your Azure Cloud spending needs optimization. Constantly running overboard with your Cloud budget is one of the clearest hints that you need to optimize your Azure Cloud cost management efforts. 

Another indicator is when your usage is volatile, whereby there are frequent spikes between high and low usage, making it difficult to analyze cost dispersion. This scenario exposes you to the risk of unnecessary Cloud spending.

For this reason, it is important to understand what Cloud Computing entails from a technical and business point of view. It is advisable to consider hiring experienced professionals for your Cloud cost optimization needs to overcome associated pitfalls.  

Top 6 Azure Cost Optimization Best Practices

Set Alerts

Azure allows you to set alerts for your cloud resource spending individually. You can set spending thresholds based on; 

  •  Overall costs 
  • Cost by resource group
  • Subscription
  • Individual resource

These thresholds prevent you from careless usage and overspending on particular services. Additionally, they also prevent cost leakage from resources running overnight.

Azure’s cost alert module has various options to issue notifications, including email, MS Teams channel notification, SMS, and Webhook integration. 

Alerts help you stay within range of your budget and provide actionable insights regarding spending patterns and costly services.

Implement End-to-End Cost Monitoring

Large-scale Cloud infrastructure involves various services and resources. Such architectures often contain cost leakage blindspots, on top of the fact that keeping track of all expenditures is challenging.

Azure cost monitoring and optimization tools like MS Cost Management and Serverless360 provide a holistic picture of your Cloud spending thanks to aggregate expenditure reports against various resources and resource groups.

Furthermore, such cloud cost optimization tools track spending for multiple subscriptions. 

Typical reports provide useful information covering aspects such as; 

  • Cost breakdowns. 
  • Cash outflow points.
  • Intelligent insights regarding cost savings.

Overall, Azure cost optimization tools help track expenditures, detect anomalies, and optimize the overall infrastructure.

Know Your Needs

The Azure Cloud platform comes with more than 200 products and services. These include multiple scales of VMs, storage units, GPU clusters, and network configurations. Understanding your needs and requirements is essential for effective Cloud cost optimization and boosting ROI. 

For context, Azure VM prices can range from a few cents to tens of dollars per hour. With this in mind, choosing a high-performance machine for basic tasks like small web application deployment will end up incurring unnecessary costs and impact profit gains.

For this reason, it’s important to thoroughly research the platform and evaluate various service options to select which best suits you.

It is equally important to understand your application's requirements. Simply opting for the cheapest machine might hinder the application's performance and impact user experience.

Free Up Unused Resources

All Azure resources are linked to your subscription and start charging immediately after allocation. The problem is many of these resources charge you according to the payment plan even if they are not utilized.  

For instance, if you leave a VM running overnight, you will continue to pay for its usage. Therefore, the cost optimization best practice in this case is to make sure you deallocate any additional resources.

Additionally, VMs require you to attach storage units and network devices with separate costs. These work as additional resources and continue to incur costs even if you delete the VM. 

The good news is that Azure allows you to automatically deallocate such add-ons when the primary service (VM) is deleted. Make sure to check the ‘delete with VM’ option when initiating.

Savings Plans

Another Azure cost optimization best practice to explore if you are working on a long-term project is to make use of Microsoft's savings plans.

Savings plans require you to commit to a fixed hourly usage rate for 1 to 3 years. Under this scheme, if your usage is less than or equal to the committed hours, you get up to 65% discounted rates on your Cloud costs on Azure. 

Any usage above the commitment is billed according to the pay-as-you-go rate and is invoiced separately. These plans can boost your Azure Cloud cost management efforts drastically if they fulfill your requirements.

Research Regional Pricing

Azure’s ‘get started’ pages are simple. You can click the ‘next’ button several times and spin up your required resource. However, reviewing the intricacies involved with the setup process is an essential Azure cost optimization best practice.

Every resource and resource group asks you to select a region for your service. These regions are different geographical locations where Azure servers are located and serve to provide better latency to users in their vicinity.

The important bit is that many regions have different, region-based prices. Go through the options and list down the ones that cost the least. Then experiment with your selection to determine the best price-to-performance ratio.


Cloud architecture is the future of IT, but the unprecedentedly high costs can be disappointing and discouraging. To enjoy the benefits of the Azure cloud infrastructure, you must follow certain cost optimization best practices that provide you better control over your spending and increase ROI. 

These Cloud cost management best practices involve thoroughly monitoring your costs, researching the platform and your requirements, and opting for savings plans where possible.

Implementing these practices allows you to leverage Cloud benefits like scalability, ease of deployment, and security without breaking the bank, which can in turn translate into increased business revenue and growth.

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