What is Azure Cost Management and Billing?

With Azure products and services, you only pay for what you use. As you create and use Azure resources, you are charged for the resources. You use Azure Cost Management and Billing features to conduct billing administrative tasks and manage billing access to costs. You can also use its features to monitor and control Azure spending and to optimize Azure resource use.

Understand Azure Billing

Azure Billing features are used to review your invoiced costs and manage access to billing information. In larger organizations, procurement and finance teams usually conduct billing tasks.

A billing account is created when you sign up to use Azure. You use your billing account to manage your invoices, payments, and track costs. You can have access to multiple billing accounts. For example, you might have signed up for Azure for your personal projects. So, you might have an individual Azure subscription with a billing account. You could also have access through your organization's Enterprise Agreement or Microsoft Customer Agreement. For each scenario you would have a separate billing account.

Billing accounts

The Azure portal currently supports the following types of billing accounts:

Scopes for billing accounts

A scope is a node in a billing account that you use to view and manage billing. It is where you manage billing data, payments, invoices, and conduct general account management.

Microsoft Online Services Program

Scope Definition
Billing account Represents a single owner (Account administrator) for one or more Azure subscriptions. An Account Administrator is authorized to perform various billing tasks like create subscriptions, view invoices or change the billing for subscriptions.
Subscription Represents a grouping of Azure resources. An invoice is generated at the subscription scope. It has its own payment methods that are used to pay its invoice.

Enterprise Agreement

Scope Definition
Billing account Represents an Enterprise Agreement enrollment. Invoice is generated at the billing account scope. It's structured using departments and enrollment accounts.
Department Optional grouping of enrollment accounts.
Enrollment account Represents a single account owner. Azure subscriptions are created under the enrollment account scope.

Microsoft Customer Agreement

Scope Tasks
Billing account Represents a customer agreement for multiple Microsoft products and services. The billing account is structured using billing profiles and invoice sections.
Billing profile Represents an invoice and its payment methods. Invoice is generated at this scope. The billing profile can have multiple invoice sections.
Invoice section Represents a group of costs in an invoice. Subscriptions and other purchases are associated to the invoice section scope.

Understand Azure Cost Management

Cost management is the process of effectively planning and controlling costs involved in your business. Cost management tasks are normally performed by finance, management, and app teams. Azure Cost Management + Billing helps organizations plan with cost in mind. It also helps to analyze costs effectively and take action to optimize cloud spending. To learn more about how to approach cost management as an organization, take a look at the Azure Cost Management best practices article.

Watch the Azure Cost Management overview video for a quick overview about how Azure Cost Management can help you save money in Azure. To watch other videos, visit the Cost Management YouTube channel.

Although related, billing differs from cost management. Billing is the process of invoicing customers for goods or services and managing the commercial relationship.

Cost Management shows organizational cost and usage patterns with advanced analytics. Reports in Cost Management show the usage-based costs consumed by Azure services and third-party Marketplace offerings. Costs are based on negotiated prices and factor in reservation and Azure Hybrid Benefit discounts. Collectively, the reports show your internal and external costs for usage and Azure Marketplace charges. Other charges, such as reservation purchases, support, and taxes are not yet shown in reports. The reports help you understand your spending and resource use and can help find spending anomalies. Predictive analytics are also available. Cost Management uses Azure management groups, budgets, and recommendations to show clearly how your expenses are organized and how you might reduce costs.

You can use the Azure portal or various APIs for export automation to integrate cost data with external systems and processes. Automated billing data export and scheduled reports are also available.

Plan and control expenses

The ways that Cost Management help you plan for and control your costs include: Cost analysis, budgets, recommendations, and exporting cost management data.

You use cost analysis to explore and analyze your organizational costs. You can view aggregated costs by organization to understand where costs are accrued and to identify spending trends. And you can see accumulated costs over time to estimate monthly, quarterly, or even yearly cost trends against a budget.

Budgets help you plan for and meet financial accountability in your organization. They help prevent cost thresholds or limits from being surpassed. Budgets can also help you inform others about their spending to proactively manage costs. And with them, you can see how spending progresses over time.

Recommendations show how you can optimize and improve efficiency by identifying idle and underutilized resources. Or, they can show less expensive resource options. When you act on the recommendations, you change the way you use your resources to save money. To act, you first view cost optimization recommendations to view potential usage inefficiencies. Next, you act on a recommendation to modify your Azure resource use to a more cost-effective option. Then you verify the action to make sure that the change you make is successful.

If you use external systems to access or review cost management data, you can easily export the data from Azure. And you can set a daily scheduled export in CSV format and store the data files in Azure storage. Then, you can access the data from your external system.

Cloudyn deprecation

Cloudyn is an Azure service related to Cost Management that is being deprecated by the end of 2020. Existing Cloudyn features are being integrated directly into the Azure portal wherever possible. No new customers are being onboarded at this time, but support will remain for the product until it is fully deprecated.

Watch the Azure Cost Management and Cloudyn video to learn more about when you should use either Azure Cost Management or Cloudyn, based on your business needs. To watch other videos, visit the Cost Management YouTube channel.

Additional Azure tools

Azure has other tools that aren't a part of the Azure Cost Management and Billing feature set. However, they play an important role in the cost management process. To learn more about these tools, see the following links.

  • Azure Pricing Calculator - Use this tool to estimate your up-front cloud costs.
  • Azure Migrate - Assess your current datacenter workload for insights about what's needed from an Azure replacement solution.
  • Azure Advisor - Identify unused VMs and receive recommendations about Azure reserved instance purchases.
  • Azure Hybrid Benefit - Use your current on-premises Windows Server or SQL Server licenses for VMs in Azure to save.

Next steps

Now that you're familiar with Cost Management and Billing, the next step is to start using the service.