Last time I wrote about how Reservations can be used to save money by trading the flexibility of Azure’s pay-as-you-go (PAYG) pricing model by committing to that resource being deployed and running for a fixed term.  I focused on Reserved Instances (RIs), which can reduce the cost of the compute component of an Azure VM.  This time I want to focus on Azure Hybrid Benefit as an additional way to save money in Azure.

When a VM gets deployed in Azure, depending on which Operating System (OS) is chosen, the VM may cause more than one PAYG meter to tick up.  Windows VMs and some Linux VMs have chargeable licenses and if SQL Server is installed on the VM, that license is chargeable too.  All of these licenses will cause the relevant PAYG meters to tick up.

Just as RIs can be applied to stop the compute meter, Azure Hybrid Benefit (AHB) can be enabled to stop the OS and SQL Server meters.  Unlike RIs, Azure does not manage the assignment of licenses for you – AHB must be enabled on each specific VM and the license cannot readily move from one VM to another.

AHB requires you to have unused licenses available and that those licenses meet certain eligibility requirements, so do check to ensure your licenses are valid if you plan to use AHB.  One way to ensure your licenses are eligible is to purchase them through Cobweb via CSP Software Subscriptions.  Licenses can be purchased for a 1- or 3-year term and have the equivalent benefits of Software Assurance.  While they can be used in Azure, they can also be used for your on-premises servers, and Microsoft even allows the same license to be used twice at the same time (once on-premises and once in Azure) for up to 180 days for the purposes of migrating servers into Azure.

There are several factors that determine how much you can save when using AHB, but in general, the best savings will be made against VMs that are running 24/7, because the license meters only tick up when the VM is running.  A 3-year term offers bigger equivalent monthly savings over a 1-year term and the size and family of the Azure VM will also impact the savings that can be made.

Microsoft licensing can be complex and the rules around AHB are no exception, but I will try to simplify it.  For Windows Server Standard, Microsoft stipulates a minimum of 16-cores must be licensed per physical on-premises server, but that covers two instances of Windows running as VMs on that physical server.  When that 16-core license is instead used with AHB, Microsoft allows it to be assigned to a single Azure VM of up to 16 vCPUs or two Azure VMs of up to 8 vCPUs each.

This means that the Windows license cost when using AHB for an 8 vCPU VM in Azure is the same price as for a 1 vCPU VM.  Contrast that with PAYG licensing which is charged per vCPU that the VM has and you’ll see that bigger savings can be made over PAYG with bigger VMs that have more vCPUs – two 8 vCPU VMs using 3-year term licenses may break even after just a few months!

Due to the way SQL Server is licensed, the rules are different.  There are several editions to choose from and the biggest savings usually come from highly available deployments or where disaster recovery has been configured.  SQL licenses aren’t just for VM-based SQL either, they can also be assigned to other SQL services in Azure, such as Single or Elastic SQL Databases or SQL Managed Instances.

In most cases using Software Subscriptions will save money over PAYG, but it’s worth checking how big those savings will be and Cobweb can assist you with this.

Next time I will be rounding out this series of articles by covering more of the ways to save money in Azure that don’t quite deserve their own article, but are still useful to know.