Tutorial / Cram Notes
For the Azure Fundamentals AZ-900 exam, it’s vital to understand the different ways in which Microsoft Azure charges for services. Azure, like many cloud service providers, offers a variety of pricing models to accommodate the different use cases and requirements of its customers.
Pay-As-You-Go
The Pay-As-You-Go pricing model is one of the most straightforward. Customers pay for the computing resources as they use them, with prices determined per hour or per minute, depending on the resource. This model provides flexibility because there is no upfront commitment; users can scale services up or down as needed and only pay for what they use.
For example, Azure Virtual Machines are billed per second, and services like Azure Functions are billed per execution and the total execution time.
Reserved Instances
Azure offers a Reserved Instances pricing model, which allows customers to reserve virtual machines (VMs) on a one or three-year term. By committing to a long-term contract, customers receive a significant discount on the regular price of the VMs compared to the Pay-As-You-Go model. This can result in savings of up to 72%.
For instance, a D2s v3 virtual machine in West US under Pay-As-You-Go might cost around $0.096/hour, while the same machine under a 3-year Reserved Instance could drop to approximately $0.062/hour.
Spot Pricing
Spot pricing applies to unused Azure capacity. Customers can bid for these resources at a price lower than the Pay-As-You-Go rates, but with the caveat that Azure can reclaim these resources at any time with very short notice if the capacity is needed for other customers. Spot pricing is ideal for workloads that are tolerant to interruptions, such as batch processing jobs.
Using Azure’s pricing calculator, you can compare the cost of a Spot instance to that of the same instance under the Pay-As-You-Go model. The transient nature of Spot instances means the prices are variable and subject to change.
Azure Hybrid Benefit
The Azure Hybrid Benefit is a pricing model designed for customers with existing Microsoft licenses. It allows the use of those licenses for Azure services at a reduced cost, incorporating a bring-your-own-license (BYOL) approach. For example, customers with on-premises Windows Server or SQL Server licenses can use them to run virtual machines in Azure and save on compute costs.
Free Tier
For new users, Azure provides a Free Tier, which includes certain services free for 12 months plus a limited amount of free services monthly. This does not require a commitment other than signing up for an Azure account.
Examples of services included in the Free Tier are:
- A limited amount of Azure Cosmos DB capacity
- Certain numbers of Azure Functions executions per month
- A small instance of Azure Active Directory with a limited number of objects
Pricing Example Comparison Table
| Pricing Model | Example Cost | Commitment | Ideal Use Case |
|---|---|---|---|
| Pay-As-You-Go | $0.096/hour | None | Flexible, variable workloads |
| Reserved Instances | $0.062/hour (3yr) | 1-3 years | Predictable, steady workloads |
| Spot Pricing | Variable | None | Interruptible, batch processing |
| Azure Hybrid Benefit | Varies (based on BYOL) | Varies | Existing Microsoft license holders |
| Free Tier | $0/month | None | Trying out Azure, small projects |
Understanding these pricing models is essential for making informed decisions about cloud costs and selecting the best options for specific workloads. Effective cost management in the cloud requires a keen awareness of these models and the ability to leverage them according to your needs.
In the context of the AZ-900 exam, familiarity with these pricing options, along with an understanding of factors that can influence cost, such as regions, resource types, and service levels, will aid in recognizing how to estimate and optimize Azure spend.
Practice Test with Explanation
True/False: The Azure Pricing Calculator can help you estimate the cost of Azure products and services.
- Answer: True
The Azure Pricing Calculator is a tool provided by Microsoft that helps users to estimate the costs of various Azure products and services.
True/False: Microsoft Azure offers a Pay-As-You-Go pricing model only.
- Answer: False
Azure offers multiple pricing models including Pay-As-You-Go, Reserved Instance, and Spot Pricing, among others.
Multiple select: Which of the following are Azure pricing models? (Select all that apply)
- A) Pay-As-You-Go
- B) Reserved Virtual Machine Instances
- C) Spot Pricing
- D) Fixed Monthly Subscription
- Answer: A, B, C
Azure offers various pricing models, including Pay-As-You-Go, Reserved Virtual Machine Instances, and Spot Pricing. There is no fixed monthly subscription model; subscriptions can vary based on usage and services.
Single select: What does the Azure Reserved Virtual Machine Instances (RIs) pricing model offer?
- A) Discounts for on-demand instance usage
- B) Reduced prices for long-term commitment on certain services
- C) Free usage of virtual machines up to a certain limit
- D) A fixed set of resources for temporary use
- Answer: B
Azure Reserved Virtual Machine Instances provide reduced prices for a one or three-year commitment on certain services.
True/False: The Azure Total Cost of Ownership (TCO) Calculator can compare the cost of running services on-premises versus in Azure.
- Answer: True
The Azure TCO Calculator is designed to estimate cost savings when migrating to Azure by comparing on-premises infrastructure costs with the cost of running the same services in Azure.
True/False: Azure Spot Pricing offers the lowest price for compute instances, but with no interruptions to the virtual machines.
- Answer: False
Azure Spot Pricing offers the lowest price for compute instances; however, it comes with the risk of interruptions since the VMs can be evicted when Azure needs the capacity.
Single select: Who should use the Azure Pay-As-You-Go pricing model?
- A) Customers with predictable workloads
- B) Customers with very short-term, sporadic or unpredictable workloads
- C) Customers with long-term steady-state workloads
- D) Customers who require a fixed cost for budgeting purposes
- Answer: B
Pay-As-You-Go is suitable for customers with short-term, sporadic, or unpredictable workloads, where they only pay for the compute resources they use.
True/False: With Azure, all storage options cost the same no matter the redundancy level or access tier.
- Answer: False
Azure offers a variety of storage options with different pricing depending on the redundancy level and access tier selected.
Single select: What is the main benefit of the Azure Hybrid Benefit?
- A) It gives discounts for hybrid cloud configurations.
- B) It allows free data transfer between Azure regions.
- C) It lets you use existing Windows Server and SQL Server licenses in Azure.
- D) It offers free technical support for hybrid environments.
- Answer: C
Azure Hybrid Benefit allows customers with existing Windows Server and SQL Server licenses to use them on Azure, which can result in significant cost savings.
True/False: Azure services are charged based on a flat-rate fee regardless of the actual usage.
- Answer: False
Many Azure services are charged on a usage basis, where the costs are correlated with the amount and type of resources consumed.
True/False: Azure offers a free tier for some services that includes limited amounts of resources at no cost.
- Answer: True
Azure indeed offers a free tier for certain services like Azure App Service, Azure Functions, and others, which include limited resources free of charge.
Single select: What does an Azure Spending Limit do?
- A) It allows unlimited spending on Azure services.
- B) It offers discounts when spending reaches a certain limit.
- C) It stops your services when the spending limit is reached to prevent further costs.
- D) It automatically upgrades your account to a higher service tier when the limit is reached.
- Answer: C
An Azure Spending Limit is a feature that stops your services when the spending limit is reached to help control costs and prevent any additional charges.
Interview Questions
What are the most common cloud pricing models?
The most common cloud pricing models are Pay-As-You-Go, Reserved Instances, Spot Instances, and Hybrid Pricing.
What is the Pay-As-You-Go pricing model?
The Pay-As-You-Go pricing model charges organizations based on their actual usage of cloud resources.
What is the Reserved Instances pricing model?
The Reserved Instances pricing model requires organizations to commit to using cloud resources for a specific period, typically 1-3 years.
What is the Spot Instances pricing model?
The Spot Instances pricing model allows organizations to bid on unused cloud resources.
What is the Hybrid Pricing model?
The Hybrid Pricing model combines on-premises and cloud resources and is ideal for organizations that want to take advantage of the benefits of cloud computing while maintaining control over critical applications and data.
What factors should organizations consider when comparing cloud pricing models?
Organizations should consider factors such as cost, flexibility, predictability, and control when comparing cloud pricing models.
How can organizations choose the right cloud pricing model?
Organizations can choose the right cloud pricing model by considering their unique business needs, usage patterns, and long-term goals.
What is the benefit of the Pay-As-You-Go pricing model?
The Pay-As-You-Go pricing model allows organizations to pay for cloud services based on their actual usage, which can be a more cost-effective approach than traditional pricing models.
What is the benefit of the Reserved Instances pricing model?
The Reserved Instances pricing model can provide cost savings for organizations with predictable usage patterns.
What is the benefit of the Spot Instances pricing model?
The Spot Instances pricing model can provide cost savings for organizations with flexible workloads that can take advantage of unused cloud resources.
What is the benefit of the Hybrid Pricing model?
The Hybrid Pricing model allows organizations to take advantage of the benefits of cloud computing while maintaining control over critical applications and data.
How can organizations optimize costs with cloud pricing models?
Organizations can optimize costs with cloud pricing models by carefully monitoring their usage and choosing the pricing model that best meets their needs.
What are some challenges of cloud pricing models?
Challenges of cloud pricing models include complexity, lack of predictability, and difficulty in managing costs effectively.
How can organizations address challenges with cloud pricing models?
Organizations can address challenges with cloud pricing models by carefully evaluating their options, monitoring usage and costs, and leveraging cost optimization tools.
What is the Azure pricing calculator?
The Azure pricing calculator is a tool that enables organizations to estimate the cost of Azure services based on their usage.
I think understanding the difference between pay-as-you-go and reserved instances is crucial for the AZ-900 exam.
How do you guys manage to estimate the cost for a project in Azure? I always find this tricky.
For the AZ-900, you need to know about both CapEx and OpEx. Can someone explain the primary differences?
Any tips for reducing cloud costs in Azure?
I’m new to cloud. Can anyone explain what a consumption-based model is?
Thanks for the helpful discussion, everyone!
Why does reserved instance pricing require upfront payment?
Anyone else find the Azure Free Tier really limited?