Azure hidden costs: Identifying and avoiding them

Cloud computing has revolutionized the approach businesses take in developing, deploying, and scaling applications. Resources are conveniently accessible from any location and can be seamlessly scaled based on demand. However, while the cloud offers convenience, it introduces considerations related to ongoing costs. As cloud services shift costs from upfront capital expenses to pay-as-you-go models, monitoring expenditures becomes imperative for cloud cost optimization.

Microsoft Azure, a leading hyperscaler cloud, has an array of services to build out your company’s cloud infrastructure. Despite its popularity and offerings, it is often perceived as a comparatively expensive option by many organizations.

In this article, we will explore some of the reasons why costs may accumulate on the Microsoft Azure platform and tools for efficient Azure cost management. We will also highlight best practices for Azure cost optimization including alternative paths companies might take, such as leveraging a cost-efficient cloud provider like DigitalOcean.

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Understanding Azure costs

Companies using Azure have access to a range of services, including virtual machines (VMs), storage, databases, and more. While the benefits of subscribing to numerous services may be tempting, it’s important to understand the distinct pricing models associated with each service.

The cost of Microsoft Azure is not uniform and is contingent upon the specific services utilized and the quantity of resources consumed. Pricing can vary significantly based on the chosen services, usage patterns, and the selected pricing model. For the most current pricing information in your country’s currency, consult Microsoft’s product pricing page.

Azure services may also incur hidden costs. For instance, charges may apply for storage or data transfer, even when these services are not actively utilized. Furthermore, Azure’s default automated scaling can lead to additional charges for unused resources.

Microsoft offers a calculator to estimate the costs for various Azure services. However, the tool may not account for all intricate scenarios, potentially resulting in unforeseen costs for your business. Regular monitoring of expenditures is essential to prevent unforeseen charges.

Factors affecting Azure costs

Understanding the cost implications of Microsoft Azure is crucial for businesses seeking to embrace cloud technology, without breaking the bank. In this section, we will delve into the key factors contributing to Azure’s costs.

1. Azure’s pricing complexity

Azure has a range of services, each accompanied by its own unique pricing structure. This intricacy may result in unforeseen costs, especially when users lack comprehensive knowledge of the pricing details for each service.

2. Data transfer expenses

Data transfer can come with significant costs, particularly when moving data out of Azure to the Internet or other regions. This scenario is not exclusive to Azure and extends to other hyperscalar clouds, exemplified by the potential inflation of costs in AWS egress expenses. These costs can accumulate rapidly, particularly for applications operating globally with intensive data requirements. Learn more about Azure egress costs in this article.

3. Addressing scale and performance needs

Opting for higher-tier services to meet performance and scalability requirements translates to higher costs. Businesses in need of high-performance computing, extensive data processing capabilities, or large-scale storage may encounter elevated expenses with Azure.

4. Impact of additional features and add-ons

Costs can escalate when incorporating additional features or add-ons. Utilizing services like advanced security, monitoring tools, and support plans contributes to the overall expenditure.

5. Licensing fee considerations

Licensing fees, notably for Microsoft’s proprietary software such as Windows Server or SQL Server, represent a substantial component of overall costs. Awareness of these fees is crucial for effective budget management in an Azure environment.

6. Azure billing zones

Azure billing zones present a nuanced aspect of cost management, structured as follows:

  • Zone 1: North America, Europe, Middle East, and Africa

  • Zone 2: Asia Pacific (including Japan)

  • Zone 3: South America

  • Zone 4: Australia and New Zealand

  • Zone 5: India

Azure does not levy charges for inbound data transfers; however, charges are required for outbound data transfers, with costs varying based on the specific Azure zone. It is crucial to note that a billing zone differs from an availability zone, with a ‘zone’ specifically about billing. In contrast, ‘availability zone’ refers to Azure’s data center failure protection mechanism.

Identifying causes of hidden Azure costs

In this section, we delve into specific aspects of Azure that often contribute to unforeseen expenses:

1. Unattached disks and snapshots in Azure

One prevalent source of hidden costs in Microsoft Azure is unattached disks and snapshots. When a VM is created in Azure, ensure the associated disk is properly managed. Failing to delete a disk after removing a VM leads to ongoing storage costs. Similarly, neglecting to remove unnecessary snapshots results in continuous charges. Regularly monitoring and promptly deleting unattached disks and snapshots are essential practices to mitigate these avoidable expenses.

2. Inaccurate management of stopped Azure VMs

Accurately managing Azure VMs is critical to avoiding unnecessary charges. Various methods exist for stopping VMs, and not all result in the termination of the VM instance. Azure assigns similar statuses for correctly and incorrectly stopped machines, requiring careful examination. Manual and automatic checks are available, with the latter being more efficient.

3. Load balancer data transfer costs

Another added Azure expense arises from data transfer through the load balancer. While the usage duration of the load balancer incurs charges, additional costs are associated with incoming and outgoing data transfers. Vigilant monitoring of load balancer metrics in the Azure portal is essential to prevent unexpected expenses. Setting up alerts based on data transfer thresholds provides proactive notifications, allowing timely cost management.

4. Unused network interfaces

Network interfaces are integral to any Azure deployment, however, unused interfaces contribute to unnecessary costs. Avoiding these charges is straightforward—regularly monitor network interfaces and promptly delete any that are no longer required.

5. Overprovisioning of resources

Overprovisioning, allocating more resources than necessary to a VM, is a common source of hidden costs. Implement policies to enforce budget adherence and set up alerts to monitor spending limits to minimize overprovisioning expenses.

Best practices for avoiding hidden Azure costs

To ensure you’re maximizing the value of your cloud investment in Azure, it’s critical to focus on cost-efficiency. In this section, we delve into the best practices for Azure cost optimization:

1. Utilize Azure cost management tools

To mitigate unforeseen costs in Azure, leverage the suite of Azure Cost Management + Billing tools provided by Microsoft. These tools serve to analyze, manage, and optimize the expenses associated with cloud workloads. Key components within this suite include:

  • Azure Pricing Calculator: Before deploying workloads in Azure, employ the Pricing Calculator to estimate associated costs. This tool enables experimentation with various service types and configurations, aiding in the identification of potential cost-saving opportunities.

  • Azure Cost Analysis: Once workloads are operational in Azure, utilize the Cost Analysis feature within the Azure Portal. This tool provides a comprehensive understanding of the cost associated with each workload. Additionally, it can forecast future expenditures based on the current configuration.

  • Azure Budgets: Align cloud spending with organizational goals by configuring budgets in the Azure Portal. Budgets empower users to establish spending thresholds for Azure users and groups. Alerts are automatically triggered when these thresholds are exceeded, enabling proactive management of expenses.

  • Azure Advisor: Leverage Azure Advisor for cost optimization recommendations, with a specific focus on reducing costs associated with VM instances.

  • Azure Cost Alerts: Automatic notifications are generated when users surpass predefined usage or cost thresholds. These cost alerts come in three types: budget alerts, activated when spending reaches or exceeds a predefined amount based on resource usage or cost; credit alerts, triggered when Azure prepayments are depleted; and departmental alerts, notifying department owners when users surpass specified spending thresholds.

  • Azure Resource Manager: Enforce governance rules for Azure resources using the Azure Resource Manager. While not exactly a cost optimizer, this tool plays a crucial role in reducing costs by preventing shadow IT. It aids administrators in identifying and managing workloads that are active when no longer needed.

2. Shift workloads to containers

If your current applications are hosted on VMs, transitioning to containers can result in cost savings for cloud hosting. Containers are more efficient in resource utilization compared to VMs, as they incur less overhead from virtualization, though they can be complex to set up and require knowledge of systems such as Docker and Kubernetes. This efficiency allows for the deployment of more containers on a single host.

For instance, consider a workload consisting of 12 servers, each running on a distinct Azure VM. By adopting containers through the Azure Kubernetes Service (AKS), you can consolidate these servers onto 3-4 VMs, leading to a reduction in costs.

The pricing structure for AKS per host server aligns with standard Azure VM pricing, resulting in potential savings of up to 75% on hosting expenses. Note: opting for an uptime Service Level Agreement (SLA) incurs an additional cost of $0.10 per hour.

3. Harness serverless computing

Deploying software as a serverless function allows it to run on-demand, triggered by user-defined events. With this approach, charge is incurred only during the actual execution of the software. Serverless computing is particularly advantageous for handling intermittently occurring compute-intensive workloads. It also proves more cost-effective than hosting the service on a VM, where charges are typically tied to the continuous running of the VM, regardless of its utilization. This approach is especially beneficial for scenarios involving sporadic and resource-intensive computational tasks.

4. Organize Azure resources with tags

Resource tagging is valuable for identifying and managing cloud resources. Tags can include information such as the user profile and the organizational cost center to which it is assigned. Administrators can easily list and search for resources based on these tags, facilitating efficient resource management. This strategy helps with tracking active resources and pinpointing workloads that can be deactivated to minimize costs.

For instance, consider tagging VMs designated for development and testing purposes. During periods like company-wide holidays, administrators can swiftly identify and shut down resources with this specific tag, ensuring cost savings during periods of reduced utilization.

5. Leverage storage tiering

Azure Blob Storage pricing provides various tiers, including Premium, Hot, Cool, and Archive, each offering distinct cost structures per gigabyte-month. Additionally, users can choose from multiple redundancy options, with lower redundancy levels translating to reduced storage costs.

To economize, consider relocating less sensitive or infrequently accessed data to a lower-cost tier or opting for a less redundant storage configuration. This strategic move allows for significant cost savings. Implementing storage tiering automation directly into your applications ensures that data less frequently accessed is automatically migrated to a more cost-efficient storage tier.

6. Set up autoscaling

Autoscaling enables your applications to adjust their capacity based on workload demand. With autoscaling, Azure can automatically add or remove resources such as VMs based on predefined rules and metrics. For instance, you can set rules to increase the number of virtual machines when CPU usage exceeds a certain threshold and decrease them during periods of low activity. This flexibility helps ensure that you only pay for the resources you need when you need them, avoiding unnecessary expenses associated with over provisioned resources.

7. Choose the right Azure service plan

Achieving significant expense reductions involves choosing and implementing the right Azure savings plan for cloud computing. According to Microsoft, this plan helps organizations to decrease spending on selected services by up to 65%. Notably, the plan can be customized to align with specific project requirements, offering the flexibility of choosing between one-year or three-year term versions. By tailoring the plan to meet specific project needs and selecting an appropriate term duration, businesses can achieve substantial savings in their cloud computing expenses.

While all of these tools can help mitigate high costs from Microsoft Azure, implementing them will take time and resources, and larger companies may even dedicate specific employees to Azure cost management. Another option is exploring the many Azure alternatives available to cloud users, including DigitalOcean.

Explore DigitalOcean: A cost-effective alternative to Azure

DigitalOcean is a competitively priced alternative to Microsoft Azure, attracting small to medium-sized businesses with its transparent pricing and consistently low bandwidth costs across regions. This particular feature is advantageous for companies with global operations and those running bandwidth-intensive businesses, such as steaming or gaming applications.

With a commitment to simplicity and cost-effectiveness, DigitalOcean provides an impressive array of services that can significantly reduce monthly expenses, without having to resort to complicated cost-savings mechanisms.

  • Transparent pricing: DigitalOcean takes pride in our straightforward pricing model, charging a flat rate of $0.01 per GB for data transfer. This simplicity enhances budgeting, making costs more predictable.

  • Ample bandwidth allowances: Depending on the selected Droplet plan, users can benefit from monthly outbound bandwidth allowances ranging from 500 GiB to 11,000 GiB. Bandwidth is also pooled between Droplets. This flexibility caters to businesses of various sizes with different requirements.

  • Economic overage rates: In cases where data transfer needs exceed the allowances, DigitalOcean charges a flat rate of $0.01 per GiB for additional outbound data transfer over the public network.

  • Avoid vendor lock-in: DigitalOcean addresses the issue of high egress fees associated with vendor lock-in. By offering low and predictable egress pricing, DigitalOcean enables seamless data transfer and provider switching without facing exorbitant costs.

  • Bandwidth pooling: With the operation of multiple Droplets, DigitalOcean consolidates bandwidth allowances. This means that as you deploy more VMs, your collective bandwidth cap increases, providing greater flexibility and potential cost savings.

  • Free internal data transfer: Internal data transfers between DigitalOcean Droplets via a virtual private network do not contribute to bandwidth allowances or incur additional charges. This is especially beneficial for businesses with substantial internal data traffic.

  • Advanced offerings: Beyond standard Droplet VMs, DigitalOcean offers Premium CPU-Optimized virtual machines tailored for CPU-intensive applications, Managed Kubernetes, Managed Databases, and diverse storage options—all competitively priced.

  • Resources and customer support: DigitalOcean offers SMB-friendly customer support, extensive documentation, and tutorials. This user-friendly approach simplifies navigation, especially for those new to cloud computing.

Say goodbye to complex billing and unexpected charges, and explore the cost-effective alternative that DigitalOcean offers in comparison to Azure.

Sign up for DigitalOcean today.


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