What are Azure Reservations?

Azure Reservations help you save money by pre-paying for one-year or three-years of virtual machines, SQL Database compute capacity, Azure Cosmos DB throughput, or other Azure resources. Pre-paying allows you to get a discount on the resources you use. Reservations can significantly reduce your virtual machine, SQL database compute, Azure Cosmos DB, or other resource costs up to 72% on pay-as-you-go prices. Reservations provide a billing discount and don't affect the runtime state of your resources.

You can buy a reservation in the Azure portal.

Why buy a reservation?

If you have virtual machines, Azure Cosmos DB, or SQL databases that run for long periods of time, buying a reservation gives you the most cost-effective option. For example, when you continuously run four instances of a service without a reservation, you're charged at pay-as-you-go rates. If you buy a reservation for those resources, you immediately get the reservation discount. The resources are no longer charged at the pay-as-you-go rates.

Charges covered by reservation

Service plans:

  • Reserved Virtual Machine Instance: A reservation only covers the virtual machine compute costs. It doesn't cover additional software, networking, or storage charges.
  • Azure Cosmos DB reserved capacity: A reservation covers throughput provisioned for your resources. It doesn't cover the storage and networking charges.
  • SQL Database reserved vCore: Only the compute costs are included with a reservation. The license is billed separately.

For Windows virtual machines and SQL Database, you can cover the licensing costs with Azure Hybrid Benefit.

Who's eligible to purchase a reservation?

To buy a plan, you must have a subscription owner role in an Enterprise (MS-AZR-0017P or MS-AZR-0148P) or Pay-As-You-Go subscription (MS-AZR-003P or MS-AZR-0023P). Cloud solution providers can use the Azure portal or Partner Center to purchase Azure Reservations.

EA customers can limit purchases to EA admins by disabling the Add Reserved Instances option in EA Portal. EA admins must be a subscription owner for at least one EA subscription to purchase a reservation. The option is useful for enterprises that want a centralized team to purchase reservations for different cost centers. After the purchase, centralized teams can add cost center owners to the reservations. Owners can then scope the reservation to their subscriptions. The central team doesn't need to have subscription owner access where the reservation is purchased.

A reservation discount only applies to resources associated with Enterprise, Pay-As-You-Go, or CSP subscription types.

Reservation scope

A reservation scope determines the resources to which the reservation discount applies. A reservation scope can have following values:

Shared scope - The reservation discount is applied to the matching resources in eligible subscriptions within the billing context.

  • For Enterprise Agreement customers, the billing context is the enrollment. For Pay-as-you-go customers, the billing scope is all eligible subscriptions created by the account administrator.

Single subscription - The reservation discount is applied to the matching resources in the selected subscription.

You can update the scope after you purchase a reservation.

Discounted subscription and offer types

Reservation discounts apply to the following eligible subscriptions and offer types.

  • Enterprise agreement (offer numbers: MS-AZR-0017P or MS-AZR-0148P)
  • Pay-As-You-Go (offer numbers: MS-AZR-0003P or MS-AZR-0023P)
  • CSP subscriptions

Resources that run in a subscription with other offer types don't receive the reservation discount.

How is a reservation billed?

The reservation is charged to the payment method tied to the subscription. If you have an Enterprise subscription, the reservation cost is deducted from your monetary commitment balance. If your monetary commitment balance doesn't cover the cost of the reservation, you're billed the overage. If you have a Pay-As-You-Go subscription, the credit card you have on your account is billed immediately. If you're billed by invoice, you see the charges on your next invoice.

How reservation discount is applied

The reservation discount applies to the resource usage matching the attributes you select when you buy the reservation. The attributes include the scope where the matching VMs, SQL databases, Azure Cosmos DB, or other resources run. For example, if you want a reservation discount for four Standard D2 virtual machines in the West US region, then select the subscription where the VMs are running.

A reservation discount is "use-it-or-lose-it". If you don't have matching resources for any hour, then you lose a reservation quantity for that hour. You can't carry forward unused reserved hours.

When you shut down a resource, the reservation discount automatically applies to another matching resource in the specified scope. If no matching resources are found in the specified scope, then the reserved hours are lost.

For example, you might later create a resource and have a matching reservation that is underutilized. In this example, the reservation discount automatically applies to the new matching resource.

If the virtual machines are running in different subscriptions within your enrollment/account, then select the scope as shared. Shared scope allows the reservation discount to be applied across subscriptions. You can change the scope after you buy a reservation. For more information, see Manage Azure Reservations.

A reservation discount only applies to resources associated with Enterprise, Pay-As-You-Go, or CSP subscription types. Resources that run in a subscription with other offer types don't receive the reservation discount.

When the reservation term expires

At the end of the reservation term, the billing discount expires, and the virtual machine, SQL database, Azure Cosmos DB, or other resource is billed at the pay-as-you go price. Azure Reservations don't auto-renew. To continue getting the billing discount, you must buy a new reservation for eligible services and software.

Discount applies to different sizes

When you buy a reservation, the discount can apply to other instances with attributes that are within the same size group. This feature is known as instance size flexibility. The flexibility of the discount coverage depends on the type of reservation and the attributes you pick when you buy the reservation.

Service plans:

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