Azure Storage Cost Optimization Part I: Azure Reserved Capacity

Introduction: Azure Storage reserved capacity offers you a discount on capacity for block blobs and for Azure Data Lake Storage Gen2 data in standard storage accounts when you commit to a reservation for either one year or three years. A reservation provides a fixed amount of storage capacity for the term of the reservation

Optimize Cost with Reserved Capacity

Tabular Cost Comparison based on 1 & 3 Yrs. respectively

• The cost savings achieved depend on the duration of your reservation
• It also depends on the total capacity you choose to reserve, and the access tier and type of redundancy that you’ve chosen for your storage account
• Azure Storage reserved capacity can be purchased in units of 100 TiB and 1 PiB per month for a one-year or three-year term
• Azure Storage reserved capacity is available for a single subscription, multiple subscriptions (shared scope), and management groups
• A reservation is applied to your usage within the purchased scope and cannot be limited to a specific storage account, container, or object within the subscription
• Early deletion, operations, bandwidth, and data transfer charges are not included in the reservation
• The capacity charges that match the reservation attributes are charged at the discount rates instead of at the pay-as-you go rates
• All access tiers (hot, cool, and archive) are supported for reservations

Potential for significant cost savings, ‘PayGo’ vs ‘Reserved Capacity’ pricing model

Here in the snippet below a comparative analysis is given, ‘PayGo’ vs ‘Reserved Capacity’

Setting the parameters to calculate the storage pricing [Source]

‘pay as you go’ storage pricing model

‘reserved capacity’ storage pricing model

Example ‘Bar Chart’ visualization to see the difference graphically for Access Tier i.e., PayGo vs 1 or 3 Yr. Reservation (Dummy Data)

Note: If you reserve 1PB (Petabyte) per month, prices are considerably lower i.e., greater the storage volume lower the storage pricing.

In depth details associated Azure Reserved Capacity for Storage

Inclusions & Exclusions

Savings with one year of commitment

Cancellation Fee & Charges

KPIs for considering or opting for Azure Reserved Capacity for Blob-Storage

KPI I: Make sure you are actually storing BLOBs

• Make sure the data is blob storage. With Azure Storage, a lot of your data might actually not be blobs. Azure Storage Reserved Capacity can only be used for blobs or Azure Data Lake Storage Gen2 data.
• Make sure you are not using a premium storage account. Premium storage accounts, even blobs in premium storage accounts, are not supported for reserved capacity.

KPI II: Are the savings for your tier worth it

• Is 12-% savings really worth committing funds 3 years in advance? While this will vary company to company, I think the answer for a lot of companies is no.
• However, there’s a really neat option available: You can choose to be billed monthly for Azure Storage Reserved Capacity, at no additional cost! This essentially makes the entire issue with operating versus capital expenditure moot, since you can use either model in conjunction with reserved capacity.

KPI III: Get your data stored first

• Azure Storage Reserved Capacity operates on a use-it-or-lose-it basis, meaning that if you prepay for 1 PB of reserved capacity, but are currently using less than that amount, any unused reserved capacity does not carry forward, and is simply lost.
• The obvious requirement here is to delay a reserved capacity purchase until AFTER you have ingested your data. That said, a staged approach, in which you purchase chunks of reserved capacity as you reach certain thresholds, can also make a lot of sense.

KPI IV: Have enough data stored

• Azure Storage Reserved Capacity has a minimum commitment of 100 TB. This means that if you are storing less than 100 TB, you will wind up with unused capacity that will simply be lost.
• Nothing earth-shattering here; the clear requirement is that you have at least 100 TB of data before you contemplate reserved capacity.

KPI V: Make sure you are happy with the access tier and redundancy level

When you purchase Azure Storage reserved capacity, you have to select:

• The subscription.
• The unit size (100 TB or 1 PB units).
• The region.
• The access tier.
• The redundancy level.

All five of these ingredients go into locking your reserved capacity to only apply to blobs matching those criteria. So, the bar is now raised: Not only do you need at least 100 TB of data, you need 100 TB of data in the same subscription, region, access tier, and redundancy level.

KPI VI: Operations not included

• Another key point is that the savings achieved with Azure Storage Reserved Capacity are not a percentage of your total costs, but ONLY the storage portion. Reserved capacity does not apply to operations, and all operations will continue to be billed at PAYGO rates.
• It’s not that the customer is saving with reserved capacity, it’s just that the actual storage costs on which they save are only one part of the total costs incurred on their Azure Blob Storage account.

Recommendations

Azure’s recommendation engine evaluates your hourly usage over the past 7, 30, and 60 days. Azure typically recommends selecting the quantity of reservations that maximizes your savings. Estimated costs are simulated both with and without reservations for comparison, and this calculation includes any special discounts you may have applied to your on-demand usage rates. Recommendation quantity and savings are calculated for a 3-year reservation when available. If a 3-year reservation isn’t purchasable, the recommendation is calculated using the 1-year reservation price. Recommendations available in Advisor consider your past 30-day usage trend.

• Recommendations are not provided for resources that are shut down regularly.
• Advisor has only single-subscription scope recommendations. If you want to see recommendations for the entire billing scope (which is billing account or billing profile), you can use Azure portal.
• Advisor recommendations for shared-scope reservations can take up to 5 days to disappear.
• You cannot save unused reserved hours for later, so if you do not have any qualifying resources in a given hour, then you lose the reservation quantity for that hour

Scope

Once you purchase an Azure Reservation, Microsoft automatically applies the discount to resources matching the reservation’s options and quantity. It implements the discounted pricing to the scope you set during the purchase process; this could be a subscription, resource group, or single resource.

For example, reserving an instance and applying it to a resource group will use the Reserved Instance discount for any compute elements in that collection. Similarly, purchasing Reserved Capacity and setting the scope to the subscription will apply the discount to eligible Azure data services at that level.

Key Points

• Azure Blob Storage Reserved Capacity is a pre-purchase option for customers who want to commit to using Azure Blob Storage for a period of one or three years.
• By committing to a Reserved Capacity purchase, customers can save up to 33% on their Blob Storage costs compared to pay-as-you-go pricing.
• Reserved Capacity can be purchased in increments of 100 TB or more, with no upper limit on the amount of capacity that can be reserved.
• Reserved Capacity can be used for any tier of Azure Blob Storage (Hot, Cool, or Archive) and can be used across multiple accounts and regions.
• Reserved Capacity can be purchased through the Azure portal, Azure APIs, or Azure PowerShell.
• Customers can exchange or cancel their Reserved Capacity at any time, with proration of unused capacity.
• Reserved Capacity purchases can be combined with other Azure discounts and offers, such as Azure Hybrid Benefit and Azure Dev/Test pricing.
• Reserved Capacity is a flexible option for customers who have predictable Blob Storage usage and want to save money on their storage costs over the long term.