It’d be nice if you could simply look at your monthly cloud computing bill and think “Hmm, that looks about right”. But that seems like a bit of a risk these days.

As your Azure environment grows alongside your business, the risk of costs spiralling out of control also rises.

But there are plenty of ways to bring your cloud spending down and stop things getting out of control. You can make use of Azure’s toolkit of cost optimisation features to save money without losing performance.

In this guide, we’ll look into Azure’s suite of cost optimisation tools. You’ll learn not just how they work, but more importantly, when and how to use them effectively.

Choosing the right Azure cost optimisation tool

Many organisations find themselves paying more than necessary for their Azure services, not because they lack cost management tools, but because they’re not using the right combinations of tools for their specific scenarios.

Different scenarios demand different approaches:

• Steady, predictable workloads benefit most from commitment-based discounts
• Variable workloads require a mix of flexible pricing options and careful capacity planning
• Dev/test environments need different optimisation strategies than production
• Specialised services like Azure Virtual Desktop have their own unique cost considerations

Modern Azure environments typically involve more than one of these scenarios. So, it makes sense to combine different tools and approaches.

We’ll tell you how, but first, let’s get the basics sorted. Here’s what each of Azure’s core cost optimisation tools actually does:

Now let’s take a closer look at how each option works.

Azure Cost Management: your cost control centre

At its core, Azure Cost Management serves as your central hub for understanding and controlling cloud spending.

While other tools focus on specific types of savings, Cost Management provides the visibility and insights you need to make informed decisions about your entire Azure estate. But it’s not without its complexities.

While the basic features are straightforward, getting the most out of Cost Management takes a bit of know-how.

What the tool does

Cost Management truly shines in several areas that make it indispensable for Azure governance:

Real-time cost visibility: The platform provides near real-time cost tracking across your entire Azure estate. This immediate visibility helps you catch unexpected spending spikes before they become significant issues. You can track spending patterns and identify anomalies. It can help you understand cost drivers across different subscriptions and resource groups.

Budget management and alerts: The budgeting features go beyond simple threshold tracking. You can set up sophisticated alert conditions based on various metrics and trends. So, for instance, you might want alerts when spending exceeds historical patterns, not just when it hits a fixed threshold.

Cost allocation info: For enterprises managing multiple departments or clients, the cost allocation features are invaluable. You can create detailed reports showing resource consumption and costs by department, project, or any other custom tags you’ve implemented.

Limitations to consider

Data latency: While basic costs update quickly, some metrics have longer refresh cycles. Understanding these latency periods is crucial for accurate reporting and decision-making. Some cost data might take 24-72 hours to fully reflect in your reports.

Complex pricing integration: Cost Management doesn’t always immediately reflect new pricing benefits from tools like Reserved Instances or Savings Plans. You’ll need to account for this when analysing cost data during transitions between pricing models.

Resource-specific blind spots: Some Azure services have limited cost visibility in Cost Management. For example, detailed cost breakdowns for certain PaaS services might require additional tools or manual analysis.

Getting the most from Cost Management

To maximise the value of Cost Management, we recommend customising it to your use cases:

Tagging strategy: Implement a comprehensive tagging strategy from the start — this will enable sophisticated cost analysis and allocation. Your tags should reflect your business structure and reporting needs.

Custom views and dashboards: Don’t rely solely on default views. Create custom dashboards that highlight the metrics most relevant to your organisation. This might include trending data for specific resource types or cost comparisons across environments.

Automation integration: Why not connect Cost Management with your automation workflows? You can trigger Azure Automation runbooks based on cost alerts, automatically scaling down resources when spending exceeds thresholds.

Integration with other tools

Cost Management works best when integrated with other Azure cost optimisation tools. For example:

• Use insights from Cost Management to inform Reserved Instance purchases
• Combine cost data with Azure Advisor recommendations for targeted optimisation
• Feed cost metrics into your DevOps pipelines for cost-aware deployment decisions

You should think of Cost Management as your central source of truth and use it alongside other tools for specific optimisation tasks. This approach gives you both the big picture and the detailed control you need for effective cost governance.

Reserved Instances and Savings Plans: Commitment-based discounts

While Cost Management helps you understand your spending, the real savings come from choosing the right purchasing models for your workloads.

Azure’s commitment-based options – Reserved Instances (RIs) and Savings Plans – can deliver significant cost reductions, but they do need a bit of consideration before you choose.

These tools represent a fundamental trade-off: commit to specific usage patterns in exchange for substantial discounts. Let’s examine each option and understand when to use them.

Reserved Instances: structured savings

Reserved Instances are a commitment to use specific Azure resources (like VMs or databases) for one or three years in exchange for discounts.

Reserved Instances offer the highest potential savings – up to 72% compared to pay-as-you-go pricing – but they come with the strictest commitments. As we explore in our detailed comparison of PAYG vs Reserved Instances, the key to success lies in understanding exactly when these savings make sense for your business.

Azure Savings Plans: The flexible alternative

Savings Plans are a more flexible approach to commitment-based savings.

With these, you agree to spend a fixed amount on compute resources for one or three years, getting discounts while being free to change the types of resources you use.

Comparing them with Reserved Instances, you’ll find they offer greater flexibility while still providing substantial discounts.

Choosing between the two

The decision between RIs and Saving Plans isn’t always straightforward. Our guide on whether Reserved Instances are right for your business or not helps you with the detailed decision-making process. But in short, here’s when you should consider each option:

Choose Reserved Instances when:

• You have stable, predictable workloads
• You can accurately forecast capacity needs
• You need maximum possible savings
• You’re comfortable with longer-term commitments

Choose Savings Plans when:

• Your workload patterns are less predictable
• You need flexibility in resource types and regions
• You want simpler management
• You’re new to commitment-based pricing

The hybrid approach: combining both tools

In many cases, the best strategy is to use both Reserved Instances and Savings Plans strategically. You could do something like this:

• Use RIs for your baseline, predictable workloads
• Apply Savings Plans to variable workloads
• Keep some capacity on PAYG for peak demands
• Regularly review and adjust your mix based on usage patterns

Commitment-based savings work well for aligning your cost strategy with your workload patterns and business needs, and hybrid is a good way to do all that.

Regular review and adjustment of your commitments, guided by Cost Management insights, means that you maintain optimal savings over time.

Predictive planning with the Azure Pricing Calculator

While Cost Management helps you understand current spending and commitment-based options help you optimise it, the Azure Pricing Calculator is your tool for looking ahead. It’s a free web-based calculator that helps you estimate the costs of cloud resources before using them.

As we detail in our guide to the Azure Pricing Calculator, you can get pretty accurate estimates, but again it’s something that requires a bit of patience and understanding.

What’s so good about the Pricing Calculator?

• Comprehensive service coverage: The calculator covers virtually every Azure service, including recent additions and preview features. This makes it invaluable for planning new deployments or estimating the cost of architectural changes.
• Commitment integration: It can factor in Reserved Instances and Savings Plans, helping you understand the potential impact of different commitment options before making purchasing decisions.
• Scenario modelling: The ability to save and share estimates makes it excellent for comparing different architectural approaches or creating budgets for new projects.

It’s a no-commitment service that you can play with as much as you want. You can build your dream setup with all the bells and whistles you could ever need, or try to make a budget-friendly implementation that doesn’t break the bank.

Where the calculator falls short

Despite its utility, the Pricing Calculator has several limitations you need to account for:

Static pricing only: The calculator provides point-in-time estimates. It doesn’t account for dynamic pricing changes or spot instance variations.

Limited real-world factors: It’s not great at estimating many real-world considerations like the below (without manual intervention):

• Network egress patterns
• Storage transaction volumes
• Backup and disaster recovery overhead
• Management and monitoring costs

No performance metrics: While it can tell you the cost of different VM sizes, it can’t help you determine which size your workload actually needs. That’s up to you to figure out.

Making the most of the calculator

To get the most accurate estimates from the Pricing Calculator, you’ve got to feed it good data.

1) Start with real data: Use your existing Cost Management data to understand typical usage patterns before making estimates.

2) Add buffer capacity: Include a margin for unexpected growth and overhead costs. You might consider adding 15-20% to calculator estimates.

3) Consider the full stack: Remember to include all components you might want to have:

• Supporting services like backup and monitoring
• Network costs, especially egress traffic
• Storage operations and capacity
• Management tools and extensions

4) Document assumptions: Keep clear records of the assumptions behind your estimates. This helps with future planning and explains any variances.

Combining tools for better planning

The Pricing Calculator works best when used alongside other tools.

You can always use Cost Management data to validate calculator estimates—compare calculator predictions with your actual costs to refine the estimation process.

Don’t forget — the calculator is a planning tool, not a budgeting system. Its estimates should be the starting point for discussion, not the final word on projected costs.

You can also factor in recommendations from Azure Advisor when building estimates, too.

What about Azure Advisor?

While we’ve focused on the four main cost optimisation tools, we shouldn’t overlook Azure Advisor. It’s essentially Microsoft’s built-in consultant that analyses your Azure usage and proactively recommends ways to optimise costs, improve security, enhance performance, and increase reliability.

On the cost front, Advisor will flag things like idle VMs, underutilised databases, and opportunities for Reserved Instance purchases – often catching inefficiencies that might slip through manual reviews.

Think of it as complementary to the other tools: while Cost Management shows you where your money’s going, and Reserved Instances help you save on planned usage, Advisor helps you spot waste and inefficiency you might have missed. So rather than tracking, visualising, and analysing your spending patterns, Azure Advisor takes a more proactive and recommendation-driven approach across multiple aspects of your Azure environment.

It’s worth making regular reviews of Advisor recommendations part of your cost management routine.

How you can optimise costs in different Azure scenarios

So, we’ve looked at the tools. You’ve got help with future planning, real-time analysis, and historical data. You’ve also got payment plans that can bring down prices dramatically.

What else can you do to lower your Azure costs?

Well, there’s a whole world of tinkering you can get into, depending on what you’re doing. Different workload types demand different cost optimisation approaches.

Rather than go through every scenario, we’ll give you examples of two common workloads (virtual desktop and data analytics) to show you where costs can be lowered.

Azure Virtual Desktop: balancing performance and cost

AVD presents unique cost optimisation challenges due to its usage patterns and resource requirements. As detailed in our guide to Azure Virtual Desktop costs, there are five major factors driving up costs that you should pay attention to.

Session host optimisation forms the foundation of AVD cost management. The compute costs for your VMs are typically the largest contributor to your overall AVD expenses. The key lies in finding the right balance between performance and cost-efficiency by carefully choosing VM sizes that match your user workloads. We’ve found that many organisations over-provision their session hosts, leading to unnecessary costs that could be avoided with proper sizing.

Scaling plans are equally important, yet often overlooked. Without proper scaling plans, session hosts can run 24/7 even when nobody’s using them. Using smart start/stop schedules based on actual usage patterns can dramatically reduce costs while maintaining availability during peak hours.

Storage costs often surprise organisations implementing AVD too, particularly related to FSLogix profile management. Profile containers, user data, and temporary storage all need careful consideration. We recommend implementing a tiered storage strategy, excluding unnecessary files from profiles, and regularly cleaning up profiles of former employees to keep costs in check.

Two additional factors frequently impact AVD costs: image bloat and management overhead. Each time you update your AVD images, older versions can accumulate in your Azure Compute Gallery, driving up storage costs if not regularly pruned. Meanwhile, the ongoing management of AVD environments requires expertise that, if lacking, can lead to inefficiencies and higher operational costs.

Data and analytics workloads

Data and analytics services often represent a big portion of Azure spending, with costs that can grow unpredictably if you don’t properly manage them. Storage volumes increase continuously, while complex analytics workloads can consume substantial compute resources.

• Storage tier optimisation – Azure offers multiple storage tiers with varying costs and access speeds. Implementing automated lifecycle management policies to move infrequently accessed data to cooler tiers can significantly reduce costs without sacrificing functionality.
• Query and processing efficiency – Poorly optimised queries in services like Synapse Analytics, Databricks, or Data Factory can consume excessive resources. Regular performance reviews and query optimization can reduce processing time and associated costs.
• Right-sizing analytics clusters – Many organisations maintain unnecessarily large Spark clusters or Synapse SQL pools. Implementing auto-scaling based on actual workload demands and scheduling cluster shutdowns during inactive periods can deliver substantial savings.

When working with data lakes and warehouses, think about implementing data retention policies that automatically archive or delete data based on business requirements and compliance needs. This stops the continuous growth of storage costs while still giving teams access to business-critical information.

General workload optimisation

Beyond specific scenarios like AVD, effective cost optimisation benefits from a systematic approach to resource management. In short: be organised, and don’t forget to check things regularly.

As outlined in our strategies for reducing cloud costs, the best results come from a mix of automated management with regular human oversight.

Three major factors consistently contribute to unnecessary spending:

• Skills gaps – The technical complexity of Azure means organisations without specialised expertise often overlook hidden costs or configure environments inefficiently. Addressing this might mean investing in training, hiring specialists, or partnering with an expert MSP.
• Overprovisioning – Many businesses migrate to the cloud by simply copying their on-premises infrastructure without optimisation. Modern cloud resources are often more powerful than legacy hardware, meaning you could achieve the same performance with smaller, more cost-effective resources.
• Idle resources – VMs, disks, and other services that are no longer actively used but still running silently drain budgets. Implementing proper governance with tagging, naming conventions, and automated policies is essential to prevent this waste.

When these are addressed, you have the opportunity to lower costs dramatically.

Lowering your Azure costs – the strategic way

As your cloud environment evolves, so should your cost strategy. Ask yourself:

• Are you actively monitoring how your cloud use is changing?
• When did you last review your commitments and licenses?
• Is your team equipped with the right skills and information?

This process isn’t a one-off; it’s a continuous practice. So, keep reviewing your setup and checking those bills.

One thing to note is that Microsoft’s own tools for cost-saving recommendations might not be the most impartial source of buying information.

That’s not to say they’re untrustworthy, but it’s in their best interests to maximise your bills, so you might want to look elsewhere occasionally. You could always seek advice from a trusted partner. One with a deep understanding of keeping costs low and performance high in Azure.

That sounds awfully familiar…

Synextra’s team of cloud specialists combine deep technical expertise with practical experience in running cost-effective Azure solutions. We can help you make the most of Azure pricing tools with a sensible, no-nonsense strategy. You’ll end up with real savings alongside supporting your business objectives.

Get in touch to discuss how we can help you optimise your Azure costs effectively.