Azure Licensing & Commitments: Negotiation Levers—Commit Levels, RI/Savings Plans, Migration Leverage, Overage Control
Azure licensing offers a range of commitment models – from pure pay-as-you-go to Reserved Instances and Savings Plans – each with its trade-offs in terms of cost, flexibility, and transparency.
For CIOs, CFOs, and procurement leaders negotiating an Azure Enterprise Agreement (EA), understanding these options is critical.
By strategically adjusting commitment levels, managing Reserved Instance/Savings Plan usage, leveraging upcoming migrations, and controlling overage risks, organizations can align Azure spend with business goals and achieve significant cost optimizations.
This guide, written from the perspective of a seasoned Microsoft licensing strategist, explores key negotiation levers for Azure EA contracts to help you achieve the best value while maintaining flexibility and governance.
For a full overview of negotiations, read our Ultimate Guide to Microsoft Contract Negotiations.
Commitment Levels – Pay-As-You-Go vs. Reservations vs. Savings Plans
Understanding Commitment Options: Azure provides multiple purchasing models for cloud services: pay-as-you-go (no upfront commitment), Azure Reservations (one- or three-year commitments on specific resources, often called Reserved Instances), and Azure Savings Plans (commitments to spend a fixed amount per hour on Azure usage for 1 or 3 years).
Each model balances cost and flexibility differently:
- Pay-As-You-Go (PAYG): You pay standard retail rates for each service as you consume it, with no upfront commitment. This offers maximum flexibility – you can scale usage up or down freely and only pay for what you use. However, there are no automatic discounts in PAYG; it’s the most expensive unit pricing. PAYG is suitable for unpredictable or short-term workloads and for organizations starting on Azure who are uncertain about their usage patterns.
- Reserved Instances (Reservations): By committing to use specific resources (such as a particular VM type in a region) for a 1- or 3-year term, you can receive substantial discounts (often 30–70% or more off the pay-as-you-go rate). This is ideal for stable, always-on workloads (e.g., production servers that run 24/7) where you know you’ll need that capacity long-term. The trade-off is reduced flexibility – you’re locked into paying for that resource whether or not you use it. Azure does offer some flexibility to exchange or refund RIs under certain conditions, but generally, if you don’t utilize a reserved instance, that prepaid capacity is wasted. Reservations are a classic “use it or lose it” commitment.
- Savings Plans: Azure Savings Plans for Compute offer a flexible commitment model, where you commit to spending a certain dollar amount per hour on compute services for 1 or 3 years. In return, you receive discounted rates (up to ~65% off) on any usage that falls under that hourly commitment. Unlike RIs, Savings Plans are not tied to specific VM SKUs or regions – the savings apply across many compute services globally (VMs, container instances, Azure Functions premium, etc.) up to the committed hourly spend. This means if one workload’s usage drops, another workload can utilize the Savings Plan benefits. You must still commit to paying the hourly amount, regardless of actual usage (so any unused commitment in any hour is forfeited). However, you have more flexibility to shift usage between services and regions. Savings Plans typically offer slightly lower discounts than equivalent RIs (since flexibility is higher), but they greatly reduce the risk of unused reserved capacity. They are well-suited for dynamic or hard-to-predict workloads where you can at least ensure a base level of spend but want the freedom to use it where needed.
Trade-offs and When Each Makes Sense: In negotiation, recognize the cost vs. flexibility trade-offs:
- Pay-as-you-go = highest flexibility, but also the highest unit cost. Use it for new, experimental, or spiky workloads, and any capacity above your committed levels (overage).
- Reservations offer the lowest cost per resource, but they are rigid in their allocation. Best for steady-state workloads that you’re certain will run continuously. Over-committing to RIs can lead to waste if your needs change.
- Savings plans offer a balance of discount and flexibility. Effective for ensuring a broad cost reduction across workloads that have somewhat steady aggregate usage but may fluctuate individually. It prevents the scenario of paying full price on lots of unreserved usage, while not tying you to specific resources as much as RIs.
Commit Levels and EA Discounts:
Within an Azure Enterprise Agreement, you will often negotiate an overall Azure consumption commitment, sometimes referred to as a Monetary Azure Commitment (e.g., spending $X per year on Azure). Microsoft rewards higher commitment levels with better contractual discounts on Azure’s pay-as-you-go rates.
For example, committing a substantial annual amount might yield a 5–15% discount on all Azure services under that EA.
Larger commitments can push those discounts higher (enterprise customers spending tens of millions annually can sometimes negotiate 15–20% or more off list prices).
The key is to choose a commitment level that is ambitious enough to secure a strong discount, but not so high that you won’t consume it.
If you overcommit and don’t use all the funds, you typically lose the value of that unused commitment at term-end.
It’s usually better to start slightly conservative and avoid paying for capacity you don’t need.
Negotiating the Structure: During EA negotiations, use creative structuring to avoid overcommitting while still getting discounts:
- Ramp Commitments to Match Growth: If you expect your Azure usage to increase due to a migration project or new application launch, consider negotiating a ramp-up commitment structure. For example, Year 1 at a lower commit (when you’re just starting migration), Year 2 higher, Year 3 higher. This way, you’re not paying for peak usage from day one. Microsoft often can accommodate ramping commitments or phased increases, aligning costs with actual adoption.
- Volume Tier Discounts: Be aware of threshold levels where a slightly higher commitment could unlock a better discount tier. If you’re near a discount breakpoint, it might be worth a modest commitment increase (with realistic usage backing it) to get that extra percentage off. Conversely, don’t jump to an exorbitant commitment just for a marginal discount gain – insist on seeing clear breakpoint levels and evaluate the risk versus the reward.
- Downside Protection: While Microsoft won’t usually let you decrease a commitment mid-term, you can negotiate flexibility options. For instance, ask about a carry-over of unused commit (some agreements allow rolling over unused funds to the next year or a grace period to use them after the term). Also consider negotiating the ability to reallocate unused commitment to other Microsoft services (or at least get some credit). These are not standard, but in large deals, you may introduce such terms. At a minimum, ensure that any overage beyond your commitment receives the same negotiated discount. Typically, usage above the committed amount will still be billed at your discounted EA rates; however, ensure this is explicitly stated. You might even negotiate an overage cap or tiered discount (e.g., any usage beyond 120% of the commitment gets an additional discount or triggers a true-up negotiation) to protect against surprise high costs. The goal is to cap downside risk: you don’t want a surprise project or spike to be billed at full list prices.
- No Overcommit Pressure: Don’t let Microsoft push an unrealistically high commitment by forecasting aggressive growth (they often assume 20%+ year-over-year cloud growth). It’s fine to commit to what you confidently expect and handle any additional growth via overage (pay-go) or a contract amendment later. Microsoft would rather have you on Azure and can adjust your commitment upward if needed; it’s more challenging to obtain relief if you overcommit. Negotiating a mid-term adjustment right (the ability to increase commitment if needed) is easier than any clause to reduce it, so lean toward the low side if uncertain.
In summary, choose the right mix of pay-go versus committed spend: maximize discounts by committing where you are certain, and preserve flexibility where you are unsure. This lever – the commit level and structure – sets the stage for all other savings in your Azure deal.
Read about Working with LSPs in Microsoft Negotiations.
RI/Savings Plans Posture – Getting Discounts, Avoiding Waste
Reserved Instances and Savings Plans are powerful tools for optimizing Azure costs. However, they must be handled strategically to avoid wasted spend.
Negotiation teams should plan their RI/Savings Plan posture, essentially deciding how much of the environment will be covered by reserved commitments versus left on a pay-as-you-go basis, and factor this into their EA negotiations.
Impact of RIs and Savings Plans on Pricing:
Both RIs and Savings Plans lock in lower prices on Azure resources in exchange for commitment:
- A 3-year Reserved Instance on a VM, for example, can cut costs by up to 72% compared to pay-as-you-go rates. This drastically lowers the effective cost of that workload.
- A Savings Plan might save, say, 50-65% on a broad set of compute usage by covering it under the plan’s hourly commitment.
If you intend to use these instruments, it will reduce your forecasted Azure spend (because you’re not paying full price for those workloads). Therefore, when negotiating your overall monetary commitment with Microsoft, account for these optimizations.
Do not double-count your savings: if you plan to heavily utilize RIs/Savings Plans, your Azure bill will be lower, and your EA commitment can be correspondingly lower.
For instance, if your workload without RIs would cost $1M/year, but with RIs it’s $600k, you should not commit the full $1M in the EA – you’d commit closer to the optimized $600k (plus other usage).
Microsoft’s representatives might not remind you of this voluntarily; it’s up to you to forecast with RI/SP discounts in mind.
Essentially, RIs and Savings Plans let you commit at the resource level instead of the contract level – use that to your advantage by lowering the baseline spend that needs an EA discount.
Reserved vs. Flexible Coverage:
A savvy strategy is to cover predictable usage with RIs or Savings Plans, and leave variable demand on a pay-as-you-go basis (or covered by a smaller Savings Plan).
For example:
- If you have a stable workload that runs 24/7 (e.g., a database server or VMs backing a consistent application), that portion can be reserved to get maximum savings.
- Suppose you have cyclical or unpredictable workloads (maybe traffic spikes during certain times, or periodic big data jobs). In that case, those might be better left on a flex model (PAYG or a more modest Savings Plan) so you’re not overcommitting during lulls.
By mixing and matching commitment types, you avoid the pitfall of over-reserving. Many organizations aim to reserve, say, 60-80% of their steady-state usage and keep 20-40% as elastic capacity.
This posture can be effectively communicated in negotiations: it shows Microsoft that you plan to optimize your Azure usage (which is beneficial for cloud cost governance) and that you’re an informed customer.
It can also justify why you might be seeking a higher discount at a lower commitment – because you won’t be paying full price for a chunk of the usage due to RIs/SPs.
Avoiding Waste:
Use data to guide RI and Savings Plan commitments. Leverage Azure usage reports and tools (Azure Cost Management + Advisor recommendations, or your own FinOps analyses) to identify which resources run at high utilization continuously – those are RI candidates.
Likewise, identify any current reservations that went underutilized; those represent waste to avoid in the future (perhaps you reserved too much capacity of a certain type).
In negotiations, ensure:
- You have the freedom to purchase RIs and Savings Plans as needed. Typically, EA customers can purchase reservations, which are deducted from their monetary commitment. Confirm that there are no contractual barriers to using these optimizations. Microsoft generally encourages their use, but obtain clarity on how RI purchases draw down your commitment or how savings plans interact with billing.
- You’re aware of cancellation/exchange policies. Azure allows the exchange of reserved instances (for different sizes/regions) or refunds (with a penalty) up to certain limits. Savings Plans, however, cannot be canceled or adjusted mid-term. Knowing this, you might consider negotiating shorter terms if uncertainty is high (e.g., opting for a 1-year savings plan or a smaller scope RI if you’re unsure about 3-year usage). Sometimes, customers negotiate special flexibility for large deals, but the standard policies usually apply.
Ultimately, the goal is to maximize discounts and minimize waste. Every dollar of unused RI or unused Savings Plan commitment is wasted budget. So commit to RIs/Savings Plans in a measured way:
- Start with a portion of workloads you are most confident in.
- Continuously monitor utilization. If you identify underutilization, consider scaling back future RI purchases or reallocating them to areas of greater need.
- If you see overutilization (e.g., consistently running lots of resources on pay-go), consider adding reservations or another savings plan during the term to capture that savings – you don’t have to wait for EA renewal to optimize at the resource level.
By having a strong RI/Savings Plan strategy, you strengthen your negotiation stance. You can approach Microsoft, saying, in effect, “We know how to optimize our Azure spend internally so that we won’t overpay.
Let’s work out an EA discount that, combined with our optimizations, meets our cost goals.” This posture encourages Microsoft to focus on overall value rather than just pushing you to spend more. It’s a clear signal that you intend to tightly govern your cloud costs.
Migration Leverage – Use Cloud Move Projects to Get Better Terms
One of the biggest negotiation cards you can play is a planned migration or expansion of workloads to Azure. Microsoft’s strategic priority is growth – they are eager to win more cloud workloads. Suppose your organization is preparing a significant cloud migration (for example, moving on-premises systems to Azure, or shifting workloads from a competitor cloud).
In that case, you have leverage to obtain better pricing and incentives in your Azure EA.
Timing and Communication:
Align your negotiation timeline with your cloud projects. If your Enterprise Agreement renewal is coming and you know you’ll be migrating a big chunk of infrastructure into Azure in the next 12-18 months, make this front-and-center in the negotiation.
Let Microsoft know that a successful deal will include support for these migration plans.
Conversely, if you just signed a deal and then later embark on a migration, you may miss out on incentives that you could have negotiated upfront.
The ideal scenario: negotiate right before or during a migration wave, when Microsoft stands to gain a lot of new Azure consumption from you.
Incentives for Migrations: Microsoft often provides financial sweeteners and other perks to encourage Azure adoption.
Don’t hesitate to ask for:
- Azure credits or funding to offset migration costs. For large moves, Microsoft can offer one-time credits (ranging from tens to hundreds of thousands of dollars in Azure spend) as an incentive. These might be structured as earn-outs (e.g., if you migrate system X by a certain date, you get $Y credit) or upfront credits applied to your bill.
- Discounted or free services during migration. Sometimes, you can get things like Azure Migration tools, Azure Architecture guidance, or even partner consulting hours funded by Microsoft at no cost to you as part of the deal.
- Ramped Commitments or Flexibility: As mentioned earlier, use the migration timeline to justify a ramped commitment. For example, “We plan to migrate two data centers into Azure over three years. Let’s structure our commitment: $2M Year 1, $5M Year 2, $10M Year 3.” Microsoft is more willing to accept a lower initial commitment if it sees the trajectory of growth. They may also offer to waive certain costs in early stages (for example, maybe providing free Azure for a dev/test environment during migration, or deferring charges until workloads are fully cutover).
- Migration-specific price protection: If one concern is that moving to Azure might expose you to unpredictable costs, negotiate safeguards. A common request is to lock in pricing or discounts for new services you adopt as part of the migration. For instance, if you’re adopting a bunch of Azure SQL Databases, ensure the discount you get now remains in place as you scale up usage later, so you’re not hit with higher rates once you’re “all-in” on Azure.
- Contractual Extras: In some cases, large customers have negotiated clauses that allow them to true-down or cancel part of the commitment if a planned migration project doesn’t occur by a certain time (although Microsoft will likely resist this). At least, try to get a review checkpoint mid-term, tied to migration milestones, where you can adjust terms if needed.
Leverage Competitive Pressure:
If you are also considering AWS or GCP for these workloads, you can (carefully) use that as leverage. Microsoft knows it’s in a fight to win your cloud business. You might say, “We’re evaluating other cloud providers for this migration” – this can prompt Microsoft to improve the deal (e.g. larger discounts or credits).
Be tactful: an outright threat can backfire, but a gentle reminder that you have options is a classic move in negotiation. Microsoft’s goal is to land and expand, so if they see an opportunity to secure large workloads now, they’re more likely to concede on pricing and terms.
Aligning with EA Negotiation Cycles:
If possible, co-term your Azure agreement with your migration schedule. Many organizations will do a special Azure-only EA or amendment when a big migration is on the horizon, rather than waiting for the standard EA renewal.
For example, suppose your EA renews in 2 years but you’re migrating this year. In that case, you might consider negotiating an Azure Consumption Commitment amendment now to capture incentives, rather than missing the opportunity.
Microsoft offers programs like the Azure Migration and Modernization Program (AMMP), which provides migration assistance and credits, that can be incorporated into your deal.
The bottom line: Make your growth Microsoft’s gain and leverage it. Clearly articulate, “We plan to increase Azure usage by X amount via migration; in exchange, we expect Y (discounts, credits, etc.) to make this investment feasible for us.”
By using upcoming cloud projects as a bargaining chip, you turn Azure’s expansion into a two-way street where both you and Microsoft benefit.
Overage Control – Protect Against Unexpected Cost Surges
Even with the best forecasting, actual cloud usage can exceed expectations.
A surge in business activity, an unplanned project, or even an error (such as resources accidentally left running) can lead to Azure overages – usage exceeding your committed levels – which, if not managed, can result in hefty unbudgeted bills. Negotiating controls and establishing governance for overages is, therefore, a crucial lever.
Contractual Overage Protections: In your EA negotiation, aim to ensure that any overage is not punitive. Typically, if you negotiated a percentage discount on Azure services as part of your commitment, that same discount should apply to any usage above the commitment as well.
Double-check this in your contract; it might be stated as “additional consumption beyond the commitment will be at the same discounted rates.” If it’s not explicit, clarify it.
You do not want a situation where you enjoy, say, 10% off up to your commitment, and then pay full list price on the portion beyond – that would erode your savings quickly. It’s usually standard to charge for overages, but it’s good to confirm.
Consider negotiating an overage pricing tier for extreme scenarios.
For example, if you might significantly exceed your commitment (perhaps due to a successful new product launch that doubles usage), you could pre-negotiate a further discount for that increment or, at the very least, a right to true up your commitment at the same discount rate.
In some cases, large customers set an “overage cap”. E.g., if we reach 150% of our commitment, we can pause and re-evaluate (not an automatic stop to Azure usage, which is impractical, but a trigger to negotiate additional capacity under better terms).
While Azure itself won’t cap your usage (you’ll always be able to consume unless you set up budget limits on your side), having language that forces a discussion or provides additional discount beyond a threshold can protect your budget.
Cloud Governance and Alerts:
On the operational side (which negotiation teams should discuss with the IT/cloud team), implement cost governance controls:
- Set up Azure Cost Management budgets and alerts aligned to your committed spend. For instance, if your annual commitment is $5M, set alerts when consumption reaches, say, 80% of that ($4M) and 100%, so you have a heads-up if you’re trending over. You can also set monthly or quarterly budgets to catch spikes early.
- Leverage Azure’s built-in spending limits for certain subscription types or use third-party tools that can send notifications and even automate responses (like shutting down non-critical environments if a threshold is exceeded). While enterprise agreements typically don’t have a hard “stop” on spend (because that could inadvertently shut down production), you can enforce internal policies for non-production environments to avoid runaway costs.
- Periodic reviews: During the EA term, regularly review consumption vs. commitment. Suppose you’re consistently 20% over your commitment. In that case, it might be worth contacting Microsoft to adjust your commitment (they’ll gladly take more, and you could negotiate that additional usage into a discounted block rather than paying pure pay-as-you-go rates). Similarly, if you see areas of overspend, you can incorporate new RIs or savings plans mid-term to bring those costs down before they accumulate.
Ensuring No Surprises: Overage control aims to prevent anything from catching you off guard. You want to emerge at the end of the year with zero surprise invoices.
A good practice in negotiations is to ask for transparent billing and reporting. Microsoft’s EA portal already provides detailed usage reports – ensure you have access to real-time or at least monthly data so you can track usage. Additionally, consider requesting a quarterly business review with Microsoft to discuss Azure consumption.
In those meetings, if usage is trending high, you can discuss adjusting things (maybe Microsoft can offer promo pricing on a new service you’re using heavily, or advise on cost optimization – making them a partner in controlling costs, not just profiting from overages).
In summary, bake into your strategy the question: “What if we spend more than planned?” Then ensure that both your contract terms (pricing for excess usage) and your internal processes (alerts and actions) are set up to handle that scenario.
That way, even if Azure usage surges, your financial exposure is controlled and negotiated in advance.
Common Azure EA Negotiation Pitfalls
When negotiating Azure commitments and licensing, organizations can stumble into several common traps. Being aware of these pitfalls can help you avoid them and negotiate smarter:
- Overcommitting on Savings Plans without runway: Eager to save, some commit to very large 3-year Savings Plans or reservations covering nearly 100% of their current usage – only to find later that portions of that capacity went unused. Don’t commit more than you can realistically consume. It’s better to start a bit smaller and increase commitments later than to be locked into paying for unused cloud time. Ensure you leave some “runway” (headroom) for growth rather than assuming unrealistically high utilization from day one.
- Relying solely on generic RI recommendations: Azure provides recommendations for reservations (e.g., “you can save $X by reserving VM Y for 3 years”). These are useful, but don’t treat them as gospel. They often look backward at usage patterns and may not be aware of future changes (e.g., if you plan to retire a workload, an RI recommendation for it becomes moot). Always overlay recommendations with your knowledge of upcoming projects and changes. Use them as a starting point, but do a human sanity check. Blindly following the portal’s suggestions can lead to reserving resources that have been busy historically but won’t be needed in the long term.
- Ignoring migration windows as negotiation events: As discussed, failing to leverage planned migrations or significant expansions in Azure during negotiations is a missed opportunity. Similarly, ignoring the end of your current on-prem licenses or hardware refresh cycles (which often precipitate cloud moves) can lead to negotiating in a vacuum. Tie your Azure EA timing to these strategic tech events. If you negotiate an EA renewal without mentioning that, say, next year you intend to move a major system to Azure, you likely won’t get credit for it in your deal. Always ask, “Are there any big changes in our Azure usage horizon?” and bring those to the table.
- Letting overages run unchecked: A classic mistake is assuming a “set and forget” approach after signing the Azure deal. Perhaps you negotiated a good discount and even secured some RIs, but then new projects emerged or usage grew beyond predictions, and nobody adjusted the plan. The result: significant portions of usage are not covered by RIs or commitments, which erodes your savings (you end up paying full price for that incremental usage). This often happens in fast-growing companies or decentralized cloud adoption scenarios. The fix is active cloud cost management (FinOps) – treat cloud spend as something to optimize continuously. If you identify an area of high spend that’s not optimized, take action (e.g., add a reservation, optimize code, etc.). Don’t wait until the EA expires to true-up a giant overage bill. Negotiators should also build in reporting and checkpoints with stakeholders to monitor Azure spend throughout the year.
Avoiding these pitfalls comes down to planning, data, and communication. Use solid data to drive commitments, align negotiation strategy with technical plans (such as migrations), and maintain a vigilant eye on consumption after the contract is signed.
FAQ – Azure Licensing Commitments Unpacked
Q: How much should we commit to in Savings Plans vs. pay-as-you-go?
A: Commit only what you’re confident you will consistently use. A good approach is to identify a baseline level of usage that is very likely to persist (or grow steadily) and cover that with a 1- or 3-year Savings Plan (or Reserved Instances). For usage above the baseline or that is uncertain, consider using pay-as-you-go or short-term commitments. In practice, many organizations might commit, for example, 70-80% of their average compute spend to a Savings Plan and leave the rest variable. This way, you maximize savings on steady workloads but retain flexibility for spikes or new projects. Always avoid committing so much that you routinely have unused (wasted) commitment – it’s better to pay a bit more on truly unexpected workloads than to overpay upfront for capacity you don’t use.
Q: Can migration projects earn us better Azure pricing?
A: Absolutely. Migration projects are one of your strongest bargaining chips. Suppose you inform Microsoft that you plan to migrate significant workloads to Azure (especially if these are currently on-premises or on a competitor’s cloud). In that case, they will often sweeten the deal to secure that business. This can come in the form of larger Azure consumption discounts, free credits, or other incentives to offset migration costs (for example, funding for migration tools or partner services). The key is to time your negotiation around the migration and be explicit about the opportunity: “We are migrating X systems with Y expected Azure spend.” Microsoft’s goal is to land those workloads, so you can negotiate things like a better discount tier, one-time credits when you achieve the migration, or flexible commit structures that accommodate the move. In short, use the promise of future Azure usage as leverage to improve pricing now.
Q: How do we prevent overage surprises during high-use months?
A: The first line of defense is proactive monitoring and budgeting. Set up Azure Cost Management budgets to alert you when monthly spend is trending above normal. Internally, establish a process to review Azure costs regularly (monthly or quarterly) so no one is caught off guard. From a negotiation standpoint, ensure your EA has predictable pricing for overages – ideally, the same rate as your committed consumption. That way, if you do go 10% over in a given period, the cost per unit is as expected (just more units consumed). You can also negotiate a provision to purchase additional capacity at the same discounted rate if needed in the mid-term, rather than paying a premium. Some companies even negotiate a “cap,” meaning that if they significantly exceed the plan, they are allowed to renegotiate the terms. While a hard cap that stops usage isn’t practical, the act of defining one forces a conversation with Microsoft. In summary, watch your usage like a hawk, and include contract terms that any extra usage won’t break the bank.
Q: Is it better to opt for Reserved Instances or Savings Plans?
A: It depends on your workload profile, and often the answer is a mix of both. Reserved Instances generally provide the deepest savings for specific predictable resources – if you know a certain VM or database will run continuously for 3 years, an RI will yield maximum discount on that item. However, RIs are inflexible (tied to specific resource types and regions, albeit with some ability to exchange). Savings Plans offer slightly lower savings on average, but provide much greater flexibility, covering a wide range of resources and adjusting to your usage patterns. They shine when your workloads fluctuate or you want a simpler way to save across a portfolio of services. Many organizations use RIs for the most stable core (e.g., 3-year RIs on a critical production cluster) and Savings Plans for broader coverage of the rest (ensuring that even if one service’s usage drops, the Savings Plan can apply to others). If forced to choose one, lean towards RIs for highly static workloads and Savings Plans for dynamic environments. Just remember, both require commitment – so whichever you choose, commit to an amount/duration you’re comfortable with.
Q: What’s the single most important lever to reduce Azure costs in an EA?
A: The commitment level – choosing the right Azure consumption commitment and getting a good discount on it – is arguably the most impactful lever. This is because it affects every Azure service you use: negotiate a strong percentage off, and all your usage costs less. However, it comes with the caveat that you must use what you commit. Therefore, the true answer is: the most important lever is a well-calibrated commitment, backed by accurate forecasting and paired with smart use of RIs/Savings Plans. In essence, data-driven planning is the real lever. If you know your needs and negotiate a commitment that secures a great discount without overcommitting, you will save the most. Conversely, even a huge discount won’t help if you committed double what you needed (wasting money), and small discounts won’t matter if you leave easy RI savings on the table. So, do your homework on usage, push hard on the commit discount, and optimize with all the programs available. That combination – savvy negotiation plus continuous optimization – is the key to minimizing Azure costs under an Enterprise Agreement.
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