Azure Cloud Cost Optimization

Pay-as-you-go vs CSP vs Enterprise Agreement - which billing option to choose?

Last year, businesses wasted around $18B on unused public cloud resources. Overspending on the cloud still happens frequently, even though it can be easily avoided.

Choosing the right way to purchase your resources can make a significant difference to your cloud bill. Here we’ll focus on the different ways to purchase Azure resources and when each option may be the most suitable for you.

Key points:
  • What are the options for buying the Azure cloud?
  • How are they different from each other?
  • Which one should you choose?

First, let’s talk about the different ways you can buy Azure.

Pay as you go vs CSP vs Enterprise Agreement

There are three main ways to purchase Azure resources, largely dependent on the size of your organization, and intended usage.

Pay-as-you-go

In this model, you buy your resources directly from Microsoft via their website. You only pay for exactly what you use, according to the specified pay-as-you-go rates.

There are no discounts or special offers, but it’s a great way to get started with Azure. If you only need the basic resources, or your usage is low, it’s an easy way to begin.

As a PAYG customer, you have direct access to Microsoft tech support in case of any problems. However, you will be responsible for implementing and configuring your services.

When to choose this model?

If your business is small (less than 100 users) or you’re trying out a new service on a small scale, it is a great choice. All you need is a credit card and a few minutes to set up your account.

If you’re in a larger or more established company, especially with strict compliance requirements, you may wish to consider other cloud purchasing models.

How to buy it?

You can buy your services directly via the Microsoft website. You just need to create an account, add your credit card details, and you’re ready to start using the cloud.

It is worth noting that certain services are always free up to a certain volume. And you can always cancel your subscription. This is particularly useful e.g. for dev/test environments when you need to build something quickly and won’t be needing these resources after deployment.

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CSP program

The CSP program is an indirect way to buy Azure resources, in that instead of Microsoft, you buy them from a Microsoft partner.

You can learn all the details from our article about the Microsoft CSP program.

When to choose this model?

It’s a great option when you need to optimize your cloud spending.

Working with a trusted partner means you have access to a dedicated team that’s familiar with your environment and can advise you on cutting down your costs.

For example, taking advantage of reserved instances could save you up to 40% on your Azure cloud bill.

But if you’re in a large organization (500-1,000 users or more) and your resource usage is fairly constant, the Enterprise Agreement may be the right option for you.

How to buy it?

To purchase Azure through the CSP program, get in touch with a provider like Predica who can set up access to your cloud resources. They will handle your billing, subscription, and support requests.

By partnering with a CSP, you can get access to special discounts, offers, or services, not available directly from Microsoft. It is worth checking with your provider what they can offer as part of your partnership, so you can make sure they’ll be able to meet your needs.

Enterprise Agreement

Using Azure products and services under the Enterprise Agreement is a traditional option, i.e. it is frequently used by large organizations.

In this model, you sign up for Azure for a 3-year-agreement, pay in advance and have the same conditions for the entire time. It will keep your costs constant but may limit your ability to react to changes and needs. Plus, priority support from Microsoft is available only at an additional cost.

When to choose this model?

For enterprises (1,000+ users) where cost reduction is a priority, it is a great option. However, if you’re looking for more personalized support or more flexibility, a CSP subscription will be a better choice.

How to buy it?

You can contact a Microsoft partner or talk to a Microsoft representative to help you choose the right option for your organization. With a single agreement for the entire business, you can easily buy all the services you need at once. This is especially useful if your usage is at a consistent level.

Azure purchasing models comparison

Here is a quick snapshot of the features of each model.

Table with Azure purchasing model comparison

How to transfer your subscription from CSP to Pay as You Go or vice versa?

If you’re on one plan but wish to change to another, it’s not a problem. In either case, you’ll be working with a partner who will help you ensure that the transfer goes smoothly.

There are a few points you need to know:

  • Microsoft will not be directly involved in moving your resources
  • Not all resources are possible to move. Check this list and consult your CSP for advice
  • Your reserved instances will expire 90 days after transfer – make sure to cancel them before the move
  • There may be some downtime while your resources are being migrated. It is unlikely to cause larger disruption, but if you have any business-critical services, get advice from your CSP before moving the subscriptions.

What to do next?

If you’re considering changing your billing model, contact your Microsoft representative or a verified partner (find your local provider here). Discuss your requirements with them and they’ll help you get started with the process.

You can also contact us to get started with a CSP agreement. You can take advantage of our direct support and free Cloud Optimizer service, where we’ll review your usage every month and look for ways to lower your costs. Get in touch to find out more.

Key takeaways:

  1. Choosing the right pricing model is the first step to optimizing the costs of cloud services.
  2. Some of the key factors influencing this decision are the size of your organization and your estimated usage.
  3. The Pay-as-you-go model is most suitable for small businesses, or for basic use.
  4. CSP program allows for special offers and personalized service It is a great option if you have a trusted partner.
  5. Enterprise Agreement is the least flexible option, however, it is cost-effective for large enterprises.