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. For more information, see the following topics:

Why should I buy a reservation?

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

What charges does a reservation cover?

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

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

Who's eligible to purchase a reservation?

Azure customers with the following subscription types can buy a reservation:

  • Enterprise agreement subscription offer type (MS-AZR-0017P or MS-AZR-0148P).
  • Pay-As-You-Go subscription offer type (MS-AZR-003P or MS-AZR-0023P).
  • Cloud Solution Provider (CSP) partners can use the Azure portal or Partner Center to purchase Azure Reservations.

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

To buy a plan:

  • You must be in an Owner role for at least one Enterprise or Pay-As-You-Go subscription.

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 is the reservation discount applied?

The reservation discount applies to the resource usage that matches 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, select the subscription where the VMs are running. 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.

To better understand how Reservations affects your billing, see the following topics:

What happens 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 with instance size flexibility

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

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