Discounting strategies with savings plans

Azure savings plan for compute became generally available (GA) in Oct 2022 and provide savings of between 11% and 65% over pay-as-you-go pricing. Essentially, Azure savings plan for compute (or for short, savings plan) is a fixed hourly commitment for you for 1- to 3-year terms. You can pay upfront or monthly at no extra cost.

Let’s understand the savings plan using an example provided by Microsoft:

Figure 7.14 – How the savings plan discount is applied

When you commit $5 per hour to a savings plan for 1 year, the following scenarios can happen:

• If your hourly usage is $5, then all your usage is covered by discounted savings plan pricing
• If your hourly usage is above $5, then over-usage will be charged at a pay-as-you-go rate
• If your hourly usage is below $5, then it’s an unused savings plan

Note

Azure savings plan for compute includes eligible resources for five...