W.r.t. cost, Is it better to create VM by selecting image - SQL 2016 on Windows Server 2016 or the other option - Install VM and later install SQL 2016 in it ?
SQL 2016 on Windows Server 2016
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Like always the answer is "it depend"
The word "better" is different from case to case and from user to user.
In order to answer if this is "better" for you we will need to understand what is you experience with Virtual Machine and with SQL Server and with the Azure.
For newbies selecting the built-in template is the fastest and the simplest, and therefore it is probably better for them.
Note! SQL Server 2016 is very old version, and I do not recommend to use it on new installation, unless you have a VERY good reason to do so. Otherwise, you probably best wait for SQL Server 2019 or use SQL Server 2017.
For the costing itself on Azure it would ask you if you already have the license in your VLSC/eOPEN.
If not the Azure VM creation would add the cost of the software to the monthly fee.
Just be sure yo tick that you got the licence if you have them, else your VM would cost more if you deploy with SQL integrated.
I suggest to deploy it integrated for the fact it automate like backup and such from the VM option, which is nice.
Sorry for the french printscreen, but it'S that option to watch:
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