Are you a UK business spending £50,000 or more annually on Azure? Your finance team is likely watching those cloud bills climb every quarter without understanding why or how to control them.
Here's what they're missing: Azure offers pricing models that can cut costs by up to 72% compared to standard pay-as-you-go rates. If your business runs stable workloads in the cloud, you're leaving serious money on the table.
Why Azure Cloud Costs Spiral Out of Control
Cloud costs are spiralling in most businesses. Not because Azure cloud services are expensive, but because they are not being managed properly.
The old IT budgeting model is dead. You used to buy servers, depreciate them over five years, and that was that. Now you're paying for cloud consumption every month, and if you're not watching carefully, those bills can double without anyone noticing.
Azure shifts IT from capital expenditure to operational expenditure. You pay for what you use, when you use it. That's brilliant for flexibility, but brutal for cost control if your finance team doesn't understand how to manage it.
What many finance leaders don't realise is this: you can cut Azure costs by up to 72% without changing how you work. Microsoft offers three pricing strategies that deliver these savings: Reserved Instances, Savings Plans, and Azure Hybrid Benefit.
For a broader overview of Azure cost management tools and strategies, see our guide on how to optimise cloud costs.
Three Azure Cloud Applications That Cut Costs
Microsoft offers three pricing strategies that slash your cloud costs in exchange for commitment. Think of them as buying in bulk, but for computing power.
Azure Reserved Instances: Lock In Predictable Costs
If you know exactly what you'll need for the next one to three years, you can pre-book that capacity at a substantial discount.
Your finance system runs 24/7. So does your CRM. These workloads aren't going anywhere. Stop paying month-to-month rates for something you know you'll use next year.
What you get:
Substantial savings compared to what you're paying now for the same capacity.
Fixed costs for one or three years. No more surprise invoices when your cloud provider changes its pricing.
Guaranteed capacity when you need to scale up. No "sorry, we're at capacity" excuses during your busiest trading period.
The limitation:
Limited flexibility. You're locked to your chosen VM size and region for the commitment term. You can exchange or cancel within certain limits, but it's essentially a fixed resource commitment.
Best for:
Predictable workloads that run continuously. Finance systems, CRM, core databases. Infrastructure, you know, won't change.
Azure Savings Plans: Maintain Flexibility Whilst Cutting Costs
Savings Plans work differently. Instead of committing to specific systems, you commit to a fixed amount of cloud spend per month.
The advantage? You can shift that spending around as your business changes. Move workloads between regions, upgrade systems, scale up or down. Your discount stays intact.
What you get:
Save up to 65% compared to month-to-month pricing.
Move resources around without losing your discount. Your development environment can become your testing environment. The savings follow the work.
Predict your cloud budget more accurately. You know what you'll spend, even if you don't know exactly where.
Automatic discounts. You don't need to do anything. The system applies savings to whatever you're using.
Best for:
Workloads that change throughout the year. Development environments that scale up and down. Analytics systems that spike during reporting periods. Testing environments that come and go.
Businesses that can't predict exactly what they'll need in three years but know they'll need something.
Azure Hybrid Benefit: Use What You Already Own
If your business already has Windows Server or SQL Server licenses with Software Assurance, you can bring them to Azure and cut costs further.
This isn't about new commitments. It's about using licenses you've already paid for to reduce your Azure bill.
What you get:
Save around 40% on Windows and SQL Server workloads in Azure by applying your existing licenses.
No double-paying for software you already own. Your current licenses work in the cloud.
Flexibility to move workloads between on-premises and Azure without buying new licenses.
The requirement:
You must have active Software Assurance or qualifying subscription licenses (such as Windows Server or SQL Server licenses). Without this, the Hybrid Benefit doesn't apply. Your licenses can be applied to Azure or on-premises, but not simultaneously in both locations long-term.
Best for:
- Businesses already invested in Microsoft licensing and are moving to Azure.
- Organisations running Windows Server or SQL Server workloads that need cloud flexibility.
- Companies wanting to maximise ROI on existing Microsoft investments whilst adopting cloud services.
Comparing Azure Cloud Offerings: Which Pricing Strategy Works?
| What You're Comparing | Reserved Instances | Savings Plans | Azure Hybrid Benefit | Using All Three |
|---|---|---|---|---|
| What you're committing to | Specific systems (size and location) for 1-3 years | Fixed hourly spend on Azure for 1-3 years | Existing Microsoft licenses with Software Assurance | Strategic mix of all cost-saving options |
| How flexible is it? | Low. Locked to chosen system type and location. Limited exchange options | Very flexible. Apply spend to any systems up to your commitment | Licensing flexibility. Can apply to cloud or on-premises as needed (not simultaneously) | Maximum flexibility with layered savings |
| How much you save | Up to 72% | Up to 65% | Around 40% on Windows/SQL workloads | Up to 80-85% when stacking all three benefits |
| Best for what? | Predictable, steady workloads that run continuously (finance systems, CRM, core databases) | Variable or evolving workloads where total spend is steady but allocations change | Windows Server and SQL Server workloads with existing licenses | Real businesses with diverse cloud needs and existing Microsoft investments |
| What's the risk? | Higher. Paying for capacity if workload changes | Lower. Easier to adapt when business needs change | None. Uses licenses you already own (just requires compliance management) | Lowest overall risk through diversification |
| How hard to manage? | Simple but inflexible. Requires accurate forecasting | Needs monitoring to ensure you're meeting the committed spend | Straightforward if you have qualifying licenses | More complex but delivers maximum value |
| What it means for you | Maximum savings if you can predict usage accurately | Optimises spend without betting the farm on one forecast | Maximises ROI on existing Microsoft investments | Comprehensive cost optimisation strategy with up to 80-85% savings |
Why Most Businesses Need All Three Approaches
Most businesses don't have purely predictable or purely variable workloads. And many already own Microsoft licenses that they could be using in Azure.
Lock your core systems into Reserved Instances. Finance, CRM, anything that runs 24/7 and won't change. Take the full 72% discount.
Cover everything else with Savings Plans. Development, analytics, seasonal systems. Get the discount without the risk of being stuck with the wrong capacity.
Apply Azure Hybrid Benefit to your Windows Server and SQL Server workloads. Use the licenses you've already paid for to reduce your Azure bill further.
This layered approach lets you control costs without sacrificing the ability to adapt when your business changes.
Working With an Azure Managed Service Provider
Your finance team shouldn't need to become Azure experts. That's not their job.
Working with a certified Azure managed service provider means someone else handles the complexity whilst you focus on running your business.
What a Good Azure Managed Service Provider Does
They identify where you're wasting money. Experienced providers have seen the common cost traps across Azure cloud services. They can assess your current spending, identify where you're overpaying, and fix it.
They deliver results faster. Your team doesn't have time to learn Azure pricing models, cost optimisation techniques, and capacity planning. A good Azure managed service provider already knows this and can implement changes while your people focus on their jobs.
They keep optimising. Cloud usage changes constantly. A partner monitors your spending, adjusts your commitments as your business evolves, and recommends changes before they become expensive problems.
They ensure compliance. Your cloud usage needs to align with internal policies and external regulations. Partners make sure it does without creating extra work for your finance team.
What to Look For in an Azure Partner
Microsoft certification. Ensure they're a recognised Microsoft Solutions Partner. Anyone can claim Azure expertise. Certification proves it.
Proven results. Ask for case studies from businesses similar to yours. Check their NPS score. Talk to their existing clients.
Clear pricing and deliverables. Look for transparent engagement models with defined SLAs. Avoid partners who only deliver reports and recommendations without implementing anything.
Finance-friendly reporting. The best partners provide dashboards and reports that integrate with your existing finance systems. You shouldn't need to check another platform to understand your cloud spend.
Choose a partner who can explain Azure cloud offerings to your board without drowning them in technical jargon. The technology is complex. Your reporting shouldn't be.
What Azure Cost Optimisation Means for Your Business
Cloud cost optimisation isn't an IT problem. It's a financial strategy issue.
Azure Reserved Instances and Savings Plans give you tools to control cloud spend, predict costs accurately, and maintain flexibility as your business changes.
Many finance leaders we work with are overpaying because their Azure commitments aren't being managed strategically. That money could fund growth instead of padding Microsoft's margins.
TSG is a certified Microsoft Solutions Partner. We can assess your current Azure usage, design a cost model that fits your business, and deliver ongoing optimisation that shows up in your financial reports.
Work with TSG and stop overpaying for cloud services.
Frequently Asked Questions
What's the difference between Azure Reserved Instances and Savings Plans?
Reserved Instances lock you into specific systems and locations for 1-3 years with up to 72% savings. Savings Plans commit you to a fixed hourly spend with complete flexibility to change systems, offering up to 65% savings. Reserved Instances maximise savings for predictable workloads, whilst Savings Plans suit businesses with variable needs.
How much can businesses save with Azure Reserved Instances?
Businesses can save up to 72% on Azure costs compared to pay-as-you-go pricing with Reserved Instances. Actual savings depend on your workload, system types, and commitment period (one or three years). Most businesses we work with see significant cost reductions when combining Reserved Instances with proper Azure management.
Does Azure Hybrid Benefit work with Reserved Instances and Savings Plans?
Yes, Azure Hybrid Benefit combines with Reserved Instances and Savings Plans for additional savings. You apply your existing Windows Server or SQL Server licenses (removing license costs) whilst getting discounts on server costs. Total savings can reach 80-85% compared to standard pricing when structured correctly by an Azure managed service provider.
Do Azure Savings Plans work for all Azure cloud applications?
Azure Savings Plans apply to Azure services like virtual machines and app services, but don't cover everything. They automatically discount eligible resources regardless of location or system type. Storage, networking, and other services follow different pricing models.
What happens if I don't use all my Reserved Instance capacity?
You pay for Reserved Instance capacity whether you use it or not. If your business changes and you're not using the capacity, you've pre-paid for resources you don't need. This is why accurate forecasting matters, and why working with an Azure managed service provider helps avoid costly mistakes.
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