Azure Changes to RI Exchange Policy

Microsoft recently announced, for the 3rd time, changes to the Azure reservation exchange policy, more specifically, the date when Reservation Exchanges would be discontinued. Although the article says that it was planned for Jan 2024, there were also a previous announcement – not mentioned – that it would finish by June 2024.

I started tracking this topic on 2023, when I was able to save millions to Farfetch by increasing Reserved Instance exposure to 90%. According to Microsoft, “the availability of Azure compute reservation exchanges for Azure Virtual Machine, Azure Dedicated Host and Azure App Service is extended until further notice.” The same article also reveals that changes to the policy will be publicly notified “ at least six months in advance“.

It is a significant relief for individuals working to expand reservation exposure, as it provides companies with greater flexibility in making exchanges without incurring additional costs or time pressure.

As we are talking about Reserved Instances, I though on sharing a summary of what it is about and some links that helped me deeper my knowledge on this field on the hope that it can help you too.

What Are Azure Reserved VM Instances?

Azure Reserved Virtual Machine Instances (RIs) allow you to save costs by committing to a one- or three-year term for virtual machines (VMs). In return, you receive a discount of up to 72% compared to pay-as-you-go pricing¹. Here’s what you need to know:

1. Cost Savings: RIs significantly reduce costs for Windows and Linux VMs. You can combine these savings with Azure Hybrid Benefit for even greater value.
2. Upfront Payment Options: Choose between a single upfront payment or a monthly payment option (with no extra cost).
3. Instance Size Flexibility: You can change the size of the VM within the same series group and apply the reservation to it.
4. Scope and Management: RIs can be scoped to a subscription or shared across multiple subscriptions. You can also split a reservation and apply it to different subscriptions.

How Azure Reserved Instances Work

1. Purchase: Easily buy RIs in the Azure portal. While upfront commitments are required, you have options if your needs change. You can cancel an RI and return the unused balance, subject to yearly limits.
2. Instance Size Flexibility: RIs allow flexibility within the same VM family. For example, a reservation for a specific size (e.g., B4MS) can apply to two B2MS servers or four B1MS servers.
3. Automated Management: Azure manages RIs automatically, ensuring you get prioritized compute capacity in Azure regions.
4. Exchange and Split: Exchange or cancel RIs if your requirements shift. You can also split a reservation and allocate instances to different subscriptions.
5. Reservations are “use it or lose it”. Reservation discounts operate on a ‘use it or lose it’ basis. If your reservation doesn’t align with available resources for any given hour, the reservation for that hour is lost, meaning, you will still pay for it. It is crucial to plan for consistent, full-time usage before making any capacity reservations.

Reserve Exchange

The reserve exchange feature allows you to exchange existing RIs for different VM sizes or regions. Keep in mind that there may be fees or limitations associated with this process.

Applying a reservation to an existing VM in Azure is straightforward. Here are the steps:

1. Identify the VM: First, locate the VM you want to apply the reservation to. You can find it in the Azure portal under the “Virtual machines” section.
2. Purchase the Reservation: Go to the “Reserved VM Instances” section in the Azure portal. Choose the desired VM size, term (1-year or 3-year), and payment option (upfront or monthly). Complete the purchase.
3. Assign the Reservation: Once purchased, navigate to the “Virtual machines” section again. Select your VM, go to “Configuration,” and choose “Reserved Instances.” Assign the purchased reservation to the VM.
4. Verify: Confirm that the reservation is correctly applied by checking the VM details. You should see the reservation term and savings reflected.

Remember that reservations are specific to VM sizes and regions. If you resize your VM or move it to a different region, you may need to adjust the reservation accordingly. 🌟

In summary, Azure RIs empower you to optimize costs, gain flexibility, and efficiently manage your VM resources. 🚀

For more details, check out the official documentation or explore videos like this one that explain Azure RIs in depth⁴.⁷ 🌟

Helpful Links

(1) Azure Reserved Virtual Machine Instances | Microsoft Azure. https://azure.microsoft.com/en-us/pricing/reserved-vm-instances/.
(2) Reserved Instances in Azure, Overview and Walk Through. https://www.youtube.com/watch?v=n3MnZJTVv6c.
(3) Azure Reserved Instances: The Complete Guide – Spot.io. https://spot.io/resources/azure-pricing/azure-reserved-instances-the-complete-guide/.
(4) Manage Azure Reservations – Microsoft Cost Management. https://learn.microsoft.com/en-us/azure/cost-management-billing/reservations/manage-reserved-vm-instance.
(5) Azure Reserved Virtual Machine Instances | Microsoft Azure. https://azure.microsoft.com/pt-pt/pricing/reserved-vm-instances/.
(6) Microsoft Azure Reservations (Reserved Instances) Deep Dive. https://www.youtube.com/watch?v=vpTDXenagcM.
(7) Save costs with Azure Reserved VM Instances. https://learn.microsoft.com/en-us/azure/virtual-machines/prepay-reserved-vm-instances.
(8) 10 Things You Should Know Before Buying Azure Reserved Instances. https://jaychapel.medium.com/10-things-you-should-know-before-buying-azure-reserved-instances-573dcad566df.
(9) How Azure Reserved Instances Work and How They Compare to AWS. https://www.flexera.com/blog/cloud/how-azure-reserved-instances-work-and-how-they-compare-to-aws/.