Azure App Service pricing is a per-instance, per-hour meter on the App Service Plan tier, not on the apps themselves. You can stack dozens of apps on a single Standard or Premium plan at no additional cost beyond the plan's per-hour rate. The six tiers — Free, Shared, Basic, Standard, PremiumV3, Isolated v2 — have distinct compute backings, distinct scaling models, and a price spread of nearly 100x from end to end. The four cost-defining decisions: choose the right tier per workload (Standard for most production, PremiumV3 for high-traffic or network-isolated workloads, Isolated v2 for compliance-driven private deployments), consolidate apps onto fewer plans to amortise per-hour cost, capture App Service Reserved Instances for steady-state production plans (37–55% saving), and rationalise the Premium SSL / custom domain / Always On feature footprint that creates per-app uplift.
The six App Service Plan tiers — and what they actually cost
Azure App Service pricing is built around the App Service Plan, which is the underlying VM resource. The plan's per-hour rate determines cost; the apps on top are free to add (up to platform limits).
| Tier | Compute | Per-hour (P1V3 equivalent) | Best fit |
|---|---|---|---|
| Free / Shared | Shared multi-tenant | $0 / $0.013 | Dev, lab, demos |
| Basic | Dedicated low-spec | ~$0.075 (B1) | Dev/Test only |
| Standard | Dedicated mid-spec, auto-scale | ~$0.20 (S1) | Most production web apps |
| PremiumV3 | Dedicated high-spec, VNet integration | ~$0.27 (P1V3) | High-traffic prod, network-isolated |
| Isolated v2 | App Service Environment v3 | ~$1.43 (I1v2) | Compliance, regulatory, fully private |
The single biggest pricing decision is Standard versus PremiumV3. Most production workloads run perfectly on Standard. PremiumV3 is required when you need VNet integration (private endpoints to back-end services), Reserved Instance discounts (only PremiumV3+ qualifies), or higher per-instance compute. The Microsoft account team will push PremiumV3 as "the production tier"; for most enterprise web apps, Standard is the correct answer and saves 30–40% per instance.
App Service Plan consolidation
The most under-used cost lever in App Service: you can run multiple apps on a single plan at no additional per-app charge. The constraint is the plan's total compute: a P1V3 plan with three apps that collectively consume 40% of its capacity is the same price as the same plan running one app at 40% capacity. Consolidate dev/test apps onto a single Basic plan, consolidate low-traffic production apps onto a single Standard plan, scale out the plan instead of duplicating it.
We routinely audit enterprises with hundreds of App Service Plans, each running a single app at <15% utilisation. Consolidation typically reduces plan count 60–75% and run-rate 50–65%.
The Azure portal "Create App" wizard defaults to creating a new App Service Plan rather than asking which existing plan to attach. Each new app spins up a new plan, each new plan pays its own per-hour meter. The default behaviour bills you for sprawl. Run a quarterly plan-consolidation audit; the unrecognised savings on a tenant of any size are routinely $50K–$200K of annual run rate.
App Service Reserved Instances
App Service Reserved Instances apply to PremiumV3 and Isolated v2 plans only. Discount: 1-year ~37% off, 3-year ~55% off. The reservation applies to plan-hours at the SKU level, automatically across matching plans in the subscription. For any enterprise running steady-state production PremiumV3 plans, the reservation is the highest-ROI single intervention in App Service.
The sizing rule: commit to the floor of always-on production plan-hours, leave the variable burst on pay-as-you-go. App Service plans tend to be more predictable than raw VM consumption because the plan instance count is engineered, not auto-scaled at machine level. Reservation risk is lower than VM RIs.
Premium features — the per-app uplift
Several App Service features price separately from the plan tier:
- App Service Domains: $12/year per custom domain, billed annually.
- Managed Certificates: free for App Service Managed Certs; SNI binding free, IP-based binding deprecated.
- Always On: free at Basic+ but doubles your effective always-allocated capacity per app instance — audit whether all apps truly need it.
- Application Insights: separate billing under Azure Monitor — per-GB ingested + per-month retained.
- Custom domains and TLS: free at Basic+, but the binding mechanism costs nothing only if SNI is used.
Isolated v2 — when ASE is the right answer
App Service Environment v3 (Isolated v2 tier) gives a fully isolated, single-tenant App Service deployment inside your VNet. Used correctly: compliance, regulated workloads, fully private endpoints with no shared multi-tenant ingress. Used incorrectly: as a "premium" tier because Microsoft positioned it that way. ASE v3 is 5–7x the price of PremiumV3. Justify it on compliance scope, not on perceived premium status.
Anonymised case study: $560K App Service reduction
A SaaS retailer ran 380 App Service Plans across three regions, 80% of them PremiumV3 single-app deployments at <20% utilisation, no Reserved Instances anywhere. Annual App Service spend: $1.4M. The audit: consolidate the 304 PremiumV3 plans into 78 (3.9 apps per plan average); tier-down 60 plans from PremiumV3 to Standard where VNet integration was not required; capture 3-year RIs on the consolidated PremiumV3 base. Annual run-rate: $840K, $560K saved.
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Where to take this from here
App Service sits inside the broader Azure compute picture. Sequence: plan consolidation first, tier rationalisation second, Reserved Instance capture third, Premium feature audit fourth, ASE justification fifth. For broader compute commitment strategy, the Savings Plans vs Reserved Instances guide covers RI vs Savings Plan trade-offs. For governance to lock in the right tiers, the Azure governance baseline covers policy enforcement. For broader cost picture, the complete Azure cost optimisation guide covers the full stack. For commitment design, the MACC explainer covers how App Service flows through MACC. For EA leverage from a disciplined App Service footprint, see the EA tier collapse 2026 playbook. For end-to-end advisory, our Azure & MACC Advisory covers it. Request a discovery call to benchmark.