Cost management and control

What are common challenges regarding costs?

Understand the pricing elements

How much will service X cost me each month? All services are priced differently, making it difficult to estimate the exact cost of a service.

In Microsoft Azure, there is a distinction between static and dynamic pricing, meaning different models for billing and consumption of resources within the Azure platform.

Static pricing
This refers to fixed or predetermined prices for Azure resources. Typically, you are charged a specific amount for a specific service or resource, regardless of actual usage. Static pricing is often used for services where resource consumption is relatively stable and predictable. Examples include a fixed monthly fee for a certain amount of storage or a virtual machine with specific configurations.

Dynamic pricing
This is billed based on actual usage of Azure resources. You are charged based on the resources you consume, such as compute power, storage, and networking. This model is more flexible and cost-effective if resource usage varies over time. With dynamic pricing, you pay for what you actually use, and billing is typically calculated on a pay-as-you-go basis.

Understand the difference in SKUs

In most Azure-based services, you have different SKUs, such as standard, premium, etc. While you may understand what the services cost in one SKU, you might not know the cost of the service in another SKU or be aware of the impact that price changes from one SKU to another can have. The difference in pricing between SKUs can be significant.

Stay updated on all changes

Microsoft Azure has nearly 2,000 changes on the platform each year. Being aware of these changes can be very beneficial and can help you save costs.

Understand which service to use

Microsoft offers a wide range of different services, and some services overlap. For example, if you want a file service that supports the SMB protocol, this can be achieved in several ways in Azure, such as with Azure Files or Azure NetApp Files.

When comparing these services purely from a cost perspective for a specific amount of storage, Azure Files is significantly cheaper.

What should you have in place to control costs?

Azure Pricing Calculator

When new projects or services are to be created, you should require the product team to generate a cost estimate using the Azure Pricing Calculator. While the initial estimate may not be entirely accurate, it can provide an indication of the types and amounts of services required. This will give insight into the expected costs.

Azure Cost Management

The price estimate generated for services should be included as a budget in Azure Cost Management, either at the resource group level or at the landing zone (subscription) level, depending on the service architecture or design. This allows you to track costs as they develop for the service and receive alerts if costs are projected to exceed the estimates.

Services should also be assigned the appropriate cost codes that can be used in cost management to provide thorough insight into the costs of each service or project.

Establish guard-rails

To prevent unnecessary provisioning of expensive premium SKUs, guardrails should be established. This can be achieved by using Azure Policy to set limitations on the SKUs and regions that can be used. Additionally, policies can be implemented to restrict the deployment of costly services to controlled environments.

Cost Management

To ensure that a product team is accountable for monitoring costs monthly, cost management involves implementing a set of processes that support this.

Factors to be discussed within cost management:

• How do new services or infrastructure affect your existing services?
• How are you using your cloud services?
• Storage, logging, redundancy, and resource organization.
• Are services configured to scale up and down when necessary?

Cost Ownership

This ensures that everyone has some form of ownership over the costs associated with a service or product. To succeed in Microsoft Azure, it is crucial for all parties to take ownership of the related costs.