Why is Microsoft Azure so expensive?

Cloud computing has changed how businesses develop, deploy, and scale applications. The flexibility and accessibility of the cloud allows companies to focus on innovation rather than infrastructure. Resources can be accessed from anywhere and scaled up or down on demand. However, with the many conveniences that the cloud provides also comes considerations of ongoing costs. As cloud services replace upfront capital expenses with pay-as-you-go models, maintaining vigilance over spending is crucial for long-term optimization.

Microsoft Azure, a leading hyperscaler in the cloud market, is known for its extensive range of services and robust infrastructure. But its popularity and comprehensive offerings come at a price, often perceived as expensive by many organizations. In this article, we will explore some of the reasons why costs may accumulate on the Microsoft Azure platform.

How much does Microsoft Azure cost?

There is no single answer to how much Microsoft Azure costs; pricing depends heavily on the specific services used and quantity of resources consumed. Pricing can vary significantly based on the services chosen, usage, and the selected pricing model—refer to their product pricing page for up to date pricing information in your country currency. Please note that the prices mentioned in this article are accurate as of December 1, 2023. Be aware that these prices are subject to change at any time.

Pricing models

Azure’s billing models include:

• Pay-as-you-go: Charges based on actual resource usage, billed monthly.

• Reserved terms: 1-year or 3-year fixed price agreements, generally more cost-effective for long-term needs.

• Free tier: Basic services available without charge, suitable for small-scale or trial purposes​

Compute services

Azure provides a variety of compute options including:

• Virtual Machines (VMs): Pricing for VMs varies based on specifications like CPU cores, RAM, local SSD storage, region, and Linux/Windows OS.

• App Service: Starting at $9.49/month for a basic shared environment for dev/test, App Service enables hosting web apps and APIs on Windows or Linux. Pricing scales with additional features like auto scaling or dedicated resources.

• Azure Functions: Their consumption plan is billed based on per-second resource consumption and executions ($0.000016/GB-s and $0.20 per million executions).

Storage services

• Blob Storage: Total cost of block blob storage depends on, volume of data stored per month, the quantity and types of operations performed, along with any data transfer costs, and the data redundancy option selected.

• File Storage: Pricing varies between Premium, Transaction optimized, Hot, and Cool storage options.

Database services

• Azure SQL Database: Dependent on database size, performance, and properties.

• Cosmos DB: Pricing is composed of compute, storage, and bandwidth usage.

Networking services

• Virtual Network: Virtual Network in Azure is free of charge, with charges for peering and the NAT Gateway.

• VPN Gateway: $26.28/month for a Basic gateway.

Azure’s pricing is complex and varies widely based on service type, usage, and the pricing model selected. Costs can accumulate quickly depending on usage levels across Azure’s various services. Careful planning is required to control spending. Use their pricing calculator to estimate costs more accurately before making a decision.

Factors that make Microsoft Azure expensive

Understanding the cost implications of Microsoft Azure is critical for businesses aiming to leverage cloud technology effectively. While Azure’s diverse offerings provide flexibility and power, they also introduce a complex pricing landscape. Here are key factors that contribute to Azure’s costs and nuances that businesses must consider to manage their cloud budgets efficiently:

• Complex pricing structure: Azure offers a wide range of services, each with its own pricing structure. This complexity can lead to unexpected costs, especially if users are not fully aware of the pricing details of each service.

• High data transfer costs: Data transfer costs, especially when data is moved out of Azure to the internet or to other regions, can be significant. This is also the case with other hyperscalar clouds; for instance, prices can balloon with AWS egress costs. These costs can accumulate rapidly, especially for data-intensive applications.

• Scale and performance needs: Higher-tier services for better performance and increased scalability come with higher costs. For businesses requiring high-performance computing, large-scale storage, or extensive data processing capabilities, Azure can be costly.

• Additional features and add-ons: Costs can escalate when additional features or add-ons are used. Services like advanced security, monitoring tools, and support plans add to the overall expenses.

• Licensing costs: For certain software, especially Microsoft’s own like Windows Server or SQL Server, licensing fees can be a significant part of the cost.

• Long-term contracts: While long-term commitments can offer cost savings, they also mean that users are locked into a certain level of spending, regardless of whether their usage decreases.

FAQs

What makes Microsoft Azure more expensive than alternatives?

Azure expenses include Windows Server licensing fees adding $0.10-0.40/hour per VM, complex pricing across compute tiers with premium charges, data egress fees for bandwidth, storage transaction costs, enterprise agreement requirements, expensive support plans, separate monitoring and backup service costs, and Azure-specific features that increase total ownership costs significantly.

How does Azure pricing compare to DigitalOcean?

Azure Windows VMs cost $75-100+/month for small instances before bandwidth and storage, while DigitalOcean Droplets start at $4/month with bandwidth included. Azure charges separately for egress, premium storage, monitoring, backups, and support, while DigitalOcean includes these features. Total Azure costs typically 3-5x higher than equivalent DigitalOcean infrastructure.

What are hidden costs that make Azure expensive?

Azure hidden costs include Windows licensing not included in base VM pricing, data egress charges for outbound traffic, storage transaction fees for operations, Azure Monitor ingestion and retention costs, backup service charges, stopped VM costs for allocated resources, load balancer fees, premium disk expenses, and support plans required for technical assistance.

How can organizations reduce Azure costs?

To reduce Azure costs: leverage Azure Reserved Instances for long-term commitments, use Spot VMs for non-critical workloads, implement auto-shutdown policies, switch to Linux VMs where possible, optimize storage tiers, monitor and eliminate data egress, use Azure Hybrid Benefit for existing licenses, and consider migrating workloads to cost-effective alternatives like DigitalOcean.