What are Azure Savings Plans?

Azure Savings Plans allow you to get discounts on Compute (…meaning, Azure Virtual Machines, Azure App Service, Azure Functions premium plan, Azure Container Instances and Azure Dedicated Host) by committing to spend a certain amount (specified as an hourly amount) on these services.

The savings plan commitments are available in one year and three year terms.

Why would you want to pick Savings Plans over Reserved Instances?

The main reason right now is flexibility (Savings Plans apply to different types of Compute) and to prepare for a future issue (after 1st of January, Reserved Instance exchanges will not be supported).

Reserved instances lock you down to a certain type of compute, for example Es v4.

If you have an Es v4 reservation and want to switch to Es v5, then starting from the 1st of January, 2024, that will become problematic as Azure will stop supporting exchanges (where you could in the past, exchange one existing reservation for a new reservation).

Azure Savings Plans are not tied to a specific type of compute, which means that you do not have to track exactly what type of Compute is running.

Instead, you just need to track how much money is being spent on Compute and commit based on that.

In this example, if a Savings Plan is used, the Es v4 virtual machine will get a discount immediately after it is changed to Es v5 as Savings Plans are not tied to a specific type of Compute.

In summary, Azure Savings Plans give you a discount on Compute and you don’t have to worry about what type of Compute is being used as you are not committing to a specific SKU/model/tier of Compute.