Organizations using Microsoft Azure often struggle with unpredictable cloud bills and wasted spend. One of the most effective ways to reduce costs is to understand how Microsoft bills for Azure resources and how available discounts and optimization features work.
Applying proven strategies such as optimizing virtual machine pricing, licensing structures, resource sizing, and security workloads can reduce overall Azure costs by 30-50%, or more.
In this episode of the Demystifying Microsoft podcast, Nathan Taylor (SVP, Global Microsoft Practice Leader at Sourcepass MCOE) discusses practical levers for Azure cost management.
The conversation focuses on real-world optimization strategies, including reservations, hybrid use benefits, VM sizing, SQL licensing, and Microsoft Sentinel log retention. It also covers how to use the Azure Pricing Calculator, how to uncover cost-saving opportunities, and common mistakes that lead to overspending.
Unexpected cloud expenses usually stem from a small set of recurring issues. Oversized virtual machines, unused licensing discounts, and inefficient log retention practices are among the most common causes of wasted spend.
Other frequent contributors include:
Failing to right-size resources based on actual usage
Overlooking hybrid use benefit eligibility
Sending excessive data to security tools such as Microsoft Sentinel
Addressing these issues with targeted optimization techniques helps control costs and ensures Azure investments deliver measurable value.
Reservations allow organizations to commit to specific VM sizes and regions for one or three years. This commitment can unlock discounts of up to 72% for predictable workloads.
Hybrid use benefit allows existing Windows Server or SQL Server licenses to be applied to Azure virtual machines. This removes additional license fees and can reduce costs by up to 40%.
When used together, these options can reduce VM costs by more than half.
Oversized virtual machines are one of the largest sources of unnecessary Azure spend. Azure Advisor and Cost Management tools help identify underutilized resources and right-sizing opportunities.
Recommended optimization practices include:
Analyzing usage trends and resizing VMs accordingly
Scheduling auto shutdowns for non-production workloads
Automating VM resizing for workloads with variable demand
Turning off Azure Virtual Desktop VMs after business hours
These actions help prevent ongoing charges for unused capacity.
SQL licensing costs in Azure scale based on the number of cores assigned to each virtual machine. Matching resources to actual workload requirements and applying hybrid use benefit to eligible SQL workloads can significantly reduce licensing expenses.
Microsoft Sentinel costs are driven by log ingestion and retention. Cost optimization requires:
Focusing ingestion on actionable security data
Filtering out non-essential logs
Selecting appropriate long term retention tiers
Regular reviews of ingestion rates and retention policies help prevent billing spikes and keep security operations cost efficient.
Azure cost management is an ongoing process that requires regular analysis and adjustment. Staying current with optimization techniques and monitoring usage trends allows organizations to respond quickly to billing changes and evolving resource needs.
Proactive review help keep Azure environments cost-efficient and aligned with business goals.
For ongoing insights into Azure cost management, subscribe to the Demystifying Microsoft podcast.
If you have questions about optimizing your Azure environment or want to explore cost-saving strategies, connect with the Sourcepass Center of Excellence for Microsoft.
Explore more in our Azure Cost Management series: